SERGIO AMONOY, vs.

Spouses JOSE GUTIERREZ and ANGELA FORNILDA,

DECISION
PANGANIBAN, J.:

Damnum absque injuria. Under this principle, the legitimate exercise of a persons
rights, even if it causes loss to another, does not automatically result in an actionable
injury. The law does not prescribe a remedy for the loss. This principle does not, however,
apply when there is an abuse of a persons right, or when the exercise of this right is
suspended or extinguished pursuant to a court order. Indeed, in the availment of ones
rights, one must act with justice, give others their due, and observe honesty and good
faith.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the
April 21, 1999 Decision[1] of the Court of Appeals (CA) in CA-GR CV No. 41451, which set
aside the judgment[2] of the Regional Trial Court (RTC) of Tanay, Rizal. The RTC had earlier
dismissed the Complaint for damages filed by herein respondents against petitioner. The
dispositive portion of the challenged CA Decision reads as follows:

WHEREFORE, the appealed Decision is SET ASIDE, and in its stead judgment is rendered
ordering the defendant-appellee Sergio Amonoy to pay the plaintiffs-appellants Bruno and
Bernardina Gutierrez as actual damages the sum of [t]wo [h]undred [f]ifty [t]housand
[p]esos (P250,000.00).[3]

Likewise assailed is the October 19, 1999 CA Resolution, [4] which denied the Motion
for Reconsideration.
The Facts
The appellate court narrated the factual antecedents of this case as follows:

This case had its roots in Special Proceedings No. 3103 of Branch I of the CFI of Pasig,
Rizal, for the settlement of the estate of the deceased Julio Cantolos, involving six (6)
parcels of land situated in Tanay, Rizal. Amonoy was the counsel of therein Francisca
Catolos, Agnes Catolos, Asuncion Pasamba and Alfonso Formilda. On 12 January 1965,
the Project of Partition submitted was approved and x x x two (2) of the said lots were
adjudicated to Asuncion Pasamba and Alfonso Formilda. The attorneys fees charged by
Amonoy was P27,600.00 and on 20 January 1965 Asuncion Pasamba and Alfonso
Formilda executed a deed of real estate mortgage on the said two (2) lots adjudicated to
them, in favor of Amonoy to secure the payment of his attorneys fees. But it was only on 6
August 1969 after the taxes had been paid, the claims settled and the properties
adjudicated, that the estate was declared closed and terminated.

Asuncion Pasamba died on 24 February 1969 while Alfonso Fornilda passed away on 2
July 1969. Among the heirs of the latter was his daughter, plaintiff-appellant Angela
Gutierrez.

Because his attorneys fees thus secured by the two lots were not paid, on 21 January
1970 Amonoy filed for their foreclosure in Civil Case No. 12726 entitled Sergio Amonoy vs.
Heirs of Asuncion Pasamba and Heirs of Alfonso Fornilda before the CFI of Pasig, Rizal, and
this was assigned to Branch VIII.The heirs opposed, contending that the attorneys fees
charged [were] unconscionable and that the agreed sum was only P11,695.92. But on 28
September 1972 judgment was rendered in favor of Amonoy requiring the heirs to pay
within 90 days the P27,600.00 secured by the mortgage, P11,880.00 as value of the
harvests, and P9,645.00 as another round of attorneys fees. Failing in that, the two (2) lots
would be sold at public auction.

They failed to pay. On 6 February 1973, the said lots were foreclosed and on 23 March
1973 the auction sale was held where Amonoy was the highest bidder at P23,760.00. On 2
May 1973 his bid was judicially confirmed. A deficiency was claimed and to satisfy it
another execution sale was conducted, and again the highest bidder was Amonoy at
P12,137.50.

Included in those sold was the lot on which the Gutierrez spouses had their house.

More than a year after the Decision in Civil Case No. 12726 was rendered, the said
decedents heirs filed on 19 December 1973 before the CFI of Pasig, Rizal[,] Civil Case No.
18731 entitled Maria Penano, et al vs. Sergio Amonoy, et al, a suit for the annulment
thereof. The case was dismissed by the CFI on 7 November 1977, and this was affirmed by
the Court of Appeals on 22 July 1981.

Thereafter, the CFI on 25 July 1985 issued a Writ of Possession and pursuant to which a
notice to vacate was made on 26 August 1985. On Amonoys motion of 24 April 1986, the
Orders of 25 April 1986 and 6 May 1986 were issued for the demolition of structures in
the said lots, including the house of the Gutierrez spouses.

On 27 September 1985 the petition entitled David Fornilda, et al vs Branch 164 RTC IVth
Pasig, Deputy Sheriff Joaquin Antonil and Atty. Sergio Amonoy, G.R. No. L-72306, was filed
before the Supreme Court. Among the petitioners was the plaintiff-appellant Angela
Gutierrez. On a twin Musiyun (Mahigpit na Musiyon Para Papanagutin Kaugnay ng
Paglalapastangan, and Musiyung Makahingi ng Utos sa Pagpapapigil ng Pagpapagiba at
Pananagutin sa Paglalapastangan) with full titles as fanciful and elongated as
their Petisyung (Petisyung Makapagsuri Taglay and Pagpigil ng Utos), a temporary
restraining order was granted on 2 June 1986 enjoining the demolition of the petitioners
houses.

Then on 5 October 1988 a Decision was rendered in the said G.R. No. L-72306 disposing
that:

WHEREFORE, Certiorari is granted; the Order of respondent Trial Court, dated 25 July
1985, granting a Writ of Possession, as well as its Orders, dated 25 April 1986 and 16 May
1986, directing and authorizing respondent Sheriff to demolish the houses of petitioners
Angela and Leocadia Fornilda are hereby set aside, and the Temporary Restraining Order
heretofore issued, is made permanent. The six (6) parcels of land herein controverted are
hereby ordered returned to petitioners unless some of them have been conveyed to
innocent third persons.[5]

But by the time the Supreme Court promulgated the above-mentioned Decision,
respondents house had already been destroyed, supposedly in accordance with a Writ of
Demolition ordered by the lower court.
Thus, a Complaint for damages in connection with the destruction of their house was
filed by respondents against petitioner before the RTC on December 15, 1989.
In its January 27, 1993 Decision, the RTC dismissed respondents suit. On appeal, the
CA set aside the lower courts ruling and ordered petitioner to pay respondents P250,000
as actual damages. Petitioner then filed a Motion for Reconsideration, which was also
denied.
Hence, this recourse.[6]
The Issue
In his Memorandum,[7] petitioner submits this lone issue for our consideration:

Whether or not the Court of Appeals was correct in deciding that the petitioner [was]
liable to the respondents for damages[8]

The Courts Ruling

The Petition has no merit.

Main Issue: Petitioners Liability

Well-settled is the maxim that damage resulting from the legitimate exercise of a
persons rights is a loss without injury -- damnum absque injuria -- for which the law gives
no remedy.[9] In other words, one who merely exercises ones rights does no actionable
injury and cannot be held liable for damages.
Petitioner invokes this legal precept in arguing that he is not liable for the demolition
of respondents house. He maintains that he was merely acting in accordance with the Writ
of Demolition ordered by the RTC.
We reject this submission. Damnum absque injuria finds no application to this case.
True, petitioner commenced the demolition of respondents house on May 30, 1986
under the authority of a Writ of Demolition issued by the RTC. But the records show that a
Temporary Restraining Order (TRO), enjoining the demolition of respondents house, was
issued by the Supreme Court on June 2, 1986. The CA also found, based on the
Certificate of Service of the Supreme Court process server, that a copy of the TRO was
served on petitioner himself on June 4, 1986.
 Petitioner, however, did not heed the TRO of this Court. We agree with the CA that he
unlawfully pursued the demolition of respondents house well until the middle of
1987. This is clear from Respondent Angela Gutierrezs testimony. The appellate court
quoted the following pertinent portion thereof: [10]
Q. On May 30, 1986, were they able to destroy your house?
A. Not all, a certain portion only
Q. Was your house completely demolished?
A. No, sir.
Q. How about the following day?
A. It was completely demolished
Q. Until when[,] Mrs. Witness?
A. Until 1987.
Q. About what month of 1987?
A. Middle of the year.
Q. Can you tell the Honorable Court who completed the demolition?
A. The men of Fiscal Amonoy.[11]
The foregoing disproves the claim of petitioner that the demolition, which allegedly
commenced only on May 30, 1986, was completed the following day. It likewise belies his
allegation that the demolitions had already ceased when he received notice of the TRO.
Although the acts of petitioner may have been legally justified at the outset, their
continuation after the issuance of the TRO amounted to an insidious abuse of his
right. Indubitably, his actions were tainted with bad faith. Had he not insisted on
completing the demolition, respondents would not have suffered the loss that engendered
the suit before the RTC. Verily, his acts constituted not only an abuse of a right, but an
invalid exercise of a right that had been suspended when he received the TRO from this
Court on June 4, 1986. By then, he was no longer entitled to proceed with the demolition.
A commentator on this topic explains:

The exercise of a right ends when the right disappears, and it disappears when it is
abused, especially to the prejudice of others. The mask of a right without the spirit of
justice which gives it life, is repugnant to the modern concept of social law. It cannot be
said that a person exercises a right when he unnecessarily prejudices another x x x. Over
and above the specific precepts of positive law are the supreme norms of justice x x x; and
he who violates them violates the law. For this reason, it is not permissible to abuse our
rights to prejudice others.[12]

Likewise, in Albenson Enterprises Corp. v. CA,[13] the Court discussed the concept of
abuse of rights as follows:

Article 19, known to contain what is commonly referred to as the principle of abuse of
rights, sets certain standards which may be observed not only in the exercise of ones
rights but also in the performance of ones duties. These standards are the following: to act
with justice; to give everyone his due; and to observe honesty and good faith. The law,
therefore, recognizes the primordial limitation on all rights: that in their exercise, the
norms of human conduct set forth in Article 19 must be observed. A right, though by itself
legal because recognized or granted by law as such, may nevertheless become the source
of some illegality. When a right is exercised in a manner which does not conform with
norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be held responsible x x x.

Clearly then, the demolition of respondents house by petitioner, despite his receipt of
the TRO, was not only an abuse but also an unlawful exercise of such right. In insisting on
his alleged right, he wantonly violated this Courts Order and wittingly caused the
destruction of respondents house.
Obviously, petitioner cannot invoke damnum absque injuria, a principle premised on
the valid exercise of a right. [14] Anything less or beyond such exercise will not give rise to
the legal protection that the principle accords. And when damage or prejudice to another
is occasioned thereby, liability cannot be obscured, much less abated.
 In the ultimate analysis, petitioners liability is premised on the obligation to repair or
to make whole the damage caused to another by reason of ones act or omission, whether
done intentionally or negligently and whether or not punishable by law. [15]
WHEREFORE, the Petition is DENIED and the appealed Decision AFFIRMED. Costs
against petitioner.
SO ORDERED.

PROLINE SPORTS CENTER VS. CA

DECISION
BELLOSILLO, J.:

This case calls for a revisit of the demesne of malicious prosecution and its
implications.
This petition stemmed from a criminal case for unfair competition filed by Pro Line
Sports Center, Inc. (PRO LINE) and Questor Corporation (QUESTOR) against Monico
Sehwani, president of Universal Athletics and Industrial Products, Inc. (UNIVERSAL). In
that case Sehwani was exonerated. As a retaliatory move, Sehwani and UNIVERSAL filed a
civil case for damages against PRO LINE and QUESTOR for what they perceived as the
wrongful and malicious filing of the criminal action for unfair competition against them.
But first, the dramatis personae. By virtue of its merger with A.G. Spalding Bros., Inc.,
on 31 December 1971,[1] petitioner QUESTOR, a US-based corporation, became the owner
of the trademark "Spalding" appearing in sporting goods, implements and apparatuses.Co-
petitioner PRO LINE, a domestic corporation, is the exclusive distributor of "Spalding"
sports products in the Philippines. [2] Respondent UNIVERSAL, on the other hand, is a
domestic corporation engaged in the sale and manufacture of sporting goods while co-
respondent Monico Sehwani is impleaded in his capacity as president of the corporation.
On 11 February 1981, or sixteen years ago, Edwin Dy Buncio, General Manager of
PRO LINE, sent a letter-complaint to the National Bureau of Investigation (NBI) regarding
the alleged manufacture of fake "Spalding" balls by UNIVERSAL. On 23 February 1981 the
NBI applied for a search warrant with the then Court of First Instance, Br. 23, Pasig, Rizal,
then presided over by Judge Rizalina Bonifacio Vera. On that same day Judge Vera issued
Search Warrant No. 2-81 authorizing the search of the premises of UNIVERSAL in
Pasig. In the course of the search, some 1,200 basketballs and volleyballs marked
"Spalding" were seized and confiscated by the NBI. Three (3) days later, on motion of the
NBI, Judge Vera issued another order, this time to seal and padlock the molds, rubber
mixer, boiler and other instruments at UNIVERSAL's factory. All these were used to
manufacture the fake "Spalding" products, but were simply too heavy to be removed from
the premises and brought under the actual physical custody of the court. However, on 28
April 1981, on motion of UNIVERSAL, Judge Vera ordered the lifting of the seal and
padlock on the machineries, prompting the People of the Philippines, the NBI, together
with PRO LINE and QUESTOR, to file with the Court of Appeals a joint petition
for certiorari and prohibition with preliminary injunction (CA G.R. No. 12413) seeking the
annulment of the order of 28 April 1981. On 18 May 1981, the appellate court issued a
temporary restraining order enjoining Judge Vera from implementing her latest order.
Meanwhile, on 26 February 1981, PRO LINE and QUESTOR filed a criminal complaint
for unfair competition against respondent Monico Sehwani together with Robert, Kisnu,
Arjan and Sawtri, all surnamed Sehwani, and Arcadio del los Reyes before the Provincial
Fiscal of Rizal (I. S. No. 81-2040). The complaint was dropped on 24 June 1981 for the
reason that it was doubtful whether QUESTOR had indeed acquired the registration rights
over the mark "Spalding" from A. G. Spalding Bros., Inc., and complainants failed to
adduce an actual receipt for the sale of "Spalding" balls by UNIVERSAL.[3]
On 9 July 1981 a petition for review seeking reversal of the dismissal of the complaint
was filed with the Ministry of Justice. While this was pending, the Court of Appeals
rendered judgment on 4 August 1981 in CA G.R. No. 12413 affirming the order of Judge
Vera which lifted the seal and padlock on the machineries of UNIVERSAL. The People, NBI,
PRO LINE and QUESTOR challenged the decision of the appellate court before this Court
in G.R. No. 57814. On 31 August 1981 we issued a temporary restraining order against
the Court of Appeals vis-a-vis the aforesaid decision.
In connection with the criminal complaint for unfair competition, the Minister of
Justice issued on 10 September 1981 a Resolution overturning the earlier dismissal of the
complaint and ordered the Provincial Fiscal of Rizal to file an Information for unfair
competition against Monico Sehwani. The Information was accordingly filed on 29
December 1981 with then Court of First Instance of Rizal, docketed as Crim. Case No.
45284, and raffled to Br. 21 presided over by Judge Gregorio Pineda.
Sehwani pleaded not guilty to the charge. But, while he admitted to having
manufactured "Spalding" basketballs and volleyballs, he nevertheless stressed that this
was only for the purpose of complying with the requirement of trademark registration with
the Philippine Patent Office. He cited Chapter 1, Rule 43, of the Rules of Practice on
Trademark Cases, which requires that the mark applied for be used on applicant's goods
for at least sixty (60) days prior to the filing of the trademark application and that the
applicant must show substantial investment in the use of the mark. He also disclosed that
UNIVERSAL applied for registration with the Patent Office on 20 February 1981.
After the prosecution rested its case, Sehwani filed a demurrer to evidence arguing
that the act of selling the manufactured goods was an essential and constitutive element of
the crime of unfair competition under Art. 189 of the Revised Penal Code, and the
prosecution was not able to prove that he sold the products. In its Order of 12 January
1981 the trial court granted the demurrer and dismissed the charge against Sehwani.
PRO LINE and QUESTOR impugned before us in G.R. No. 63055 the dismissal of the
criminal case. In our Resolution of 2 March 1983 we consolidated G.R. No. 63055 with
G.R. No. 57814 earlier filed. On 20 April 1983 we dismissed the petition in G.R. No. 63055
finding that the dismissal by the trial court of Crim. Case No. 45284 was based on the
merits of the case which amounted to an acquittal of Sehwani. Considering that the issue
raised in G.R. No. 58714 had already been rendered moot and academic by the dismissal
of Crim. Case No. 45284 and the fact that the petition in G.R. No. 63055 seeking a review
of such dismissal had also been denied, the Court likewise dismissed the petition in G.R.
No. 58714. The dismissal became final and executory with the entry of judgment made on
10 August 1983.
Thereafter, UNIVERSAL and Sehwani filed a civil case for damages with the Regional
Trial Court of Pasig[4] charging that PRO LINE and QUESTOR maliciously and without legal
basis committed the following acts to their damage and prejudice: (a) procuring the
issuance by the Pasig trial court of Search Warrant No. 2-81 authorizing the NBI to raid
the premises of UNIVERSAL; (b) procuring an order from the same court authorizing the
sealing and padlocking of UNIVERSAL's machineries and equipment resulting in the
paralyzation and virtual closure of its operations; (c) securing a temporary restraining
order from the Court of Appeals to prevent the implementation of the trial court's order of
28 April 1981 which authorized the lifting of the seal and padlock on the subject
machineries and equipment to allow UNIVERSAL to resume operations; (d) securing a
temporary restraining order from the High Tribunal against the Court of Appeals and
charging the latter with grave abuse of discretion for holding that the order of 28 April
1981 was judiciously issued, thus prolonging the continued closure of UNIVERSAL's
business; (e) initiating the criminal prosecution of Monico Sehwani for unfair competition
under Art. 189 of the Penal Code; and, (g) appealing the order of acquittal in Crim. Case
No. 45284 directly to the Supreme Court with no other purpose than to delay the
proceedings of the case and prolong the wrongful invasion of UNIVERSAL's rights and
interests.
Defendants PRO LINE and QUESTOR denied all the allegations in the complaint and
filed a counterclaim for damages based mainly on the unauthorized and illegal
manufacture by UNIVERSAL of athletic balls bearing the trademark "Spalding."
The trial court granted the claim of UNIVERSAL declaring that the series of acts
complained of were "instituted with improper, malicious, capricious motives and without
sufficient justification." It ordered PRO LINE and QUESTOR jointly and severally to pay
UNIVERSAL and Sehwani P676,000.00 as actual and compensatory
damages, P250,000.00 as moral damages, P250,000.00 as exemplary damages.
[5]
and P50,000.00 as attorney's fees. The trial court at the same time dismissed the
counterclaim of PRO LINE and QUESTOR.
The Court of Appeals affirmed the decision of the lower court but reduced the amount
of moral damages to P150, 000.00 and exemplary damages to P100, 000.00.
Two (2) issues are raised before us: (a) whether private respondents Sehwani and
UNIVERSAL are entitled to recover damages for the alleged wrongful recourse to court
proceedings by petitioners PRO LINE and QUESTOR; and, (b) whether petitioners'
counterclaim should be sustained.
PRO LINE and QUESTOR cannot be adjudged liable for damages for the alleged
unfounded suit. The complainants were unable to prove two (2) essential elements of the
crime of malicious prosecution, namely, absence of probable cause and legal malice on the
part of petitioners.
UNIVERSAL failed to show that the filing of Crim. Case No. 45284 was bereft of
probable cause. Probable cause is the existence of such facts and circumstances as would
excite the belief in a reasonable mind, acting on the facts within the knowledge of the
prosecutor, that the person charged was guilty of the crime for which he was prosecuted.
[6]
In the case before us, then Minister of Justice Ricardo C. Puno found probable cause
when he reversed the Provincial Fiscal who initially dismissed the complaint and directed
him instead to file the corresponding Information for unfair competition against private
respondents herein.[7] The relevant portions of the directive are quoted hereunder:

The intent on the part of Universal Sports to deceive the public and to defraud a
competitor by the use of the trademark "Spalding" on basketballs and volleyballs seems
apparent. As President of Universal and as Vice President of the Association of Sporting
Goods Manufacturers, Monico Sehwani should have known of the prior registration of the
trademark "Spalding" on basketballs and volleyballs when he filed the application for
registration of the same trademark on February 20, 1981, in behalf of Universal, with the
Philippine Patent Office. He was even notified by the Patent Office through counsel on
March 9, 1981, that "Spalding" was duly registered with said office in connection with
sporting goods, implements and apparatus by A.G. Spalding & Bros., Inc. of the U.S.A.

That Universal has been selling these allegedly misbranded "Spalding" balls has been
controverted by the firms allegedly selling the goods. However, there is sufficient proof that
Universal manufactured balls with the trademark "Spalding" as admitted by Monico
himself and as shown by the goods confiscated by virtue of the search warrant.

Jurisprudence abounds to the effect that either a seller or a manufacturer of imitation

goods may be liable for violation of Section 29 of Rep. Act No. 166 (Alexander v. Sy Bok, 97
Phil. 57). This is substantially the same rule obtaining in statutes and judicial
construction since 1903 when Act No. 666 was approved (Finlay Fleming vs. Ong Tan
Chuan, 26 Phil. 579) x x x x[8]

The existence of probable cause for unfair competition by UNIVERSAL is derivable

from the facts and circumstances of the case. The affidavit of Graciano Lacanaria, a former
employee of UNIVERSAL, attesting to the illegal sale and manufacture of "Spalding" balls
and seized "Spalding" products and instruments from UNIVERSAL's factory was
sufficient prima facie evidence to warrant the prosecution of private respondents. That a
corporation other than the certified owner of the trademark is engaged in the unauthorized
manufacture of products bearing the same trademark engenders a reasonable belief that a
criminal offense for unfair competition is being committed.
Petitioners PRO LINE and QUESTOR could not have been moved by legal malice in
instituting the criminal complaint for unfair competition which led to the filing of the
Information against Sehwani. Malice is an inexcusable intent to injure, oppress, vex,
annoy or humiliate.We cannot conclude that petitioners were impelled solely by a desire to
inflict needless and unjustified vexation and injury on UNIVERSAL's business interests. A
resort to judicial processes is not per se evidence of ill will upon which a claim for damages
may be based. A contrary rule would discourage peaceful recourse to the courts of justice
and induce resort to methods less than legal, and perhaps even violent. [9]
We are more disposed, under the circumstances, to hold that PRO LINE as the
authorized agent of QUESTOR exercised sound judgment in taking the necessary legal
steps to safeguard the interest of its principal with respect to the trademark in question. If
the process resulted in the closure and padlocking of UNIVERSAL's factory and the
cessation of its business operations, these were unavoidable consequences of petitioners'
valid and lawful exercise of their right. One who makes use of his own legal right does no
injury. Qui jure suo utitur nullum damnum facit. If damage results from a person's
exercising his legal rights, it is damnum absque injuria.[10]
Admittedly, UNIVERSAL incurred expenses and other costs in defending itself from the
accusation. But, as Chief Justice Fernando would put it, "the expenses and annoyance of
litigation form part of the social burden of living in a society which seeks to attain social
control through law."[11] Thus we see no cogent reason for the award of damages,
exorbitant as it may seem, in favor of UNIVERSAL. To do so would be to arbitrarily impose
a penalty on petitioners' right to litigate.
The criminal complaint for unfair competition, including all other legal remedies
incidental thereto, was initiated by petitioners in their honest belief that the charge was
meritorious. For indeed it was. The law brands business practices which are unfair, unjust
or deceitful not only as contrary to public policy but also as inimical to private interests. In
the instant case, we find quite aberrant Sehwani's reason for the manufacture of 1,200
"Spalding" balls, i.e., the pending application for trademark registration of UNIVERSAL
with the Patent Office, when viewed in the light of his admission that the application for
registration with the Patent Office was filed on 20 February 1981, a good nine (9) days
after the goods were confiscated by the NBI. This apparently was an afterthought but
nonetheless too late a remedy. Be that as it may, what is essential for registrability is proof
of actual use in commerce for at least sixty (60) days and not the capability to
manufacture and distribute samples of the product to clients.
Arguably, respondents' act may constitute unfair competition even if the element of
selling has not been proved. To hold that the act of selling is an indispensable element of
the crime of unfair competition is illogical because if the law punishes the seller of
imitation goods, then with more reason should the law penalize the manufacturer. In U. S.
v. Manuel,[12] the Court ruled that the test of unfair competition is whether certain goods
have been intentionally clothed with an appearance which is likely to deceive the ordinary
purchasers exercising ordinary care. In this case, it was observed by the Minister of
Justice that the manufacture of the "Spalding" balls was obviously done to deceive would-
be buyers. The projected sale would have pushed through were it not for the timely seizure
of the goods made by the NBI.That there was intent to sell or distribute the product to the
public cannot also be disputed given the number of goods manufactured and the nature of
the machinery and other equipment installed in the factory.
We nonetheless affirm the dismissal of petitioners' counterclaim for damages. A
counterclaim partakes of the nature of a complaint and/or a cause of action against the
plaintiffs.[13] It is in itself a distinct and independent cause of action, so that when properly
stated as such, the defendant becomes, in respect to the matter stated by him, an actor,
and there are two simultaneous actions pending between the same parties, where each is
at the same time both a plaintiff and defendant. [14] A counterclaim stands on the same
footing and is to be tested by the same rules, as if it were an independent action. [15]
Petitioners' counterclaim for damages based on the illegal and unauthorized
manufacture of "Spalding" balls certainly constitutes an independent cause of action
which can be the subject of a separate complaint for damages against
UNIVERSAL. However, this separate civil action cannot anymore be pursued as it is
already barred by res judicata, the judgment in the criminal case (against Sehwani)
involving both the criminal and civil aspects of the case for unfair competition. [16] To recall,
petitioners PRO LINE and QUESTOR, upon whose initiative the criminal action for unfair
competition against respondent UNIVERSAL was filed, did not institute a separate civil
action for damages nor reserve their right to do so. Thus the civil aspect for damages was
deemed instituted in the criminal case. No better manifestation of the intent of petitioners
to recover damages in the criminal case can be expressed than their active participation in
the prosecution of the civil aspect of the criminal case through the intervention of their
private prosecutor. Obviously, such intervention could only be for the purpose of
recovering damages or indemnity because the offended party is not entitled to represent
the People of the Philippines in the prosecution of a public offense. [17] Section 16, Rule 110,
of the Rules of Court requires that the intervention of the offended party in the criminal
action can be made only if he has not waived the civil action nor expressly reserved his
right to institute it separately. [18] In an acquittal on the ground that an essential element of
the crime was not proved, it is fundamental that the accused cannot be held criminally nor
civilly liable for the offense. Although Art. 28 of the New Civil Code[19] authorizes the filing
of a civil action separate and distinct from the criminal proceedings, the right of petitioners
to institute the same is not unfettered. Civil liability arising from the crime is deemed
instituted and determined in the criminal proceedings where the offended party did not
waive nor reserve his right to institute it separately. [20] This is why we now hold that the
final judgment rendered therein constitutes a bar to the present counterclaim for damages
based upon the same cause.[21]
WHEREFORE, the petition is partly GRANTED. The decision of respondent Court of
Appeals is MODIFIED by deleting the award in favor of private respondents UNIVERSAL
and Monico Sehwani of actual, moral and exemplary damages as well as attorney's fees.
The dismissal of petitioners' counterclaim is AFFIRMED. No pronouncement as to
costs.
SO ORDERED.

ALBENSO ENT. CORP. vs CA

BIDIN, J.:

This petition assails the decision of respondent Court of Appeals in

CA-GR CV No. 14948 entitled "Eugenio S. Baltao, plaintiff-appellee vs. Albenson
Enterprises Corporation, et al, defendants-appellants", which modified the judgment of the
Regional Trial Court of Quezon City, Branch XCVIII in Civil Case No. Q-40920 and ordered
petitioner to pay private respondent, among others, the sum of P500,000.00 as moral
damages and attorney's fees in the amount of P50,000.00.
The facts are not disputed.

In September, October, and November 1980, petitioner Albenson Enterprises Corporation

(Albenson for short) delivered to Guaranteed Industries, Inc. (Guaranteed for short) located
at 3267 V. Mapa Street, Sta. Mesa, Manila, the mild steel plates which the latter ordered.
As part payment thereof, Albenson was given Pacific Banking Corporation Check No.
136361 in the amount of P2,575.00 and drawn against the account of E.L. Woodworks
(Rollo, p. 148).

When presented for payment, the check was dishonored for the reason "Account Closed."
Thereafter, petitioner Albenson, through counsel, traced the origin of the dishonored
check. From the records of the Securities and Exchange Commission (SEC), Albenson
discovered that the president of Guaranteed, the recipient of the unpaid mild steel plates,
was one "Eugenio S. Baltao." Upon further inquiry, Albenson was informed by the Ministry
of Trade and Industry that E.L. Woodworks, a single proprietorship business, was
registered in the name of one "Eugenio Baltao". In addition, upon verification with the
drawee bank, Pacific Banking Corporation, Albenson was advised that the signature
appearing on the subject check belonged to one "Eugenio Baltao."

After obtaining the foregoing information, Albenson, through counsel, made an

extrajudicial demand upon private respondent Eugenio S. Baltao, president of
Guaranteed, to replace and/or make good the dishonored check.

Respondent Baltao, through counsel, denied that he issued the check, or that the
signature appearing thereon is his. He further alleged that Guaranteed was a defunct
entity and hence, could not have transacted business with Albenson.

On February 14, 1983, Albenson filed with the Office of the Provincial Fiscal of Rizal a
complaint against Eugenio S. Baltao for violation of Batas Pambansa Bilang 22. Submitted
to support said charges was an affidavit of petitioner Benjamin Mendiona, an employee of
Albenson. In said affidavit, the above-mentioned circumstances were stated.

It appears, however, that private respondent has a namesake, his son Eugenio Baltao III,
who manages a business establishment, E.L. Woodworks, on the ground floor of the
Baltao Building, 3267 V. Mapa Street, Sta. Mesa, Manila, the very same business address
of Guaranteed.

On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed an information against

Eugenio S. Baltao for Violation of Batas Pambansa Bilang 22. In filing said information,
Fiscal Sumaway claimed that he had given Eugenio S. Baltao opportunity to submit
controverting evidence, but the latter failed to do so and therefore, was deemed to have
waived his right.

Respondent Baltao, claiming ignorance of the complaint against him, immediately filed
with the Provincial Fiscal of Rizal a motion for reinvestigation, alleging that it was not true
that he had been given an opportunity to be heard in the preliminary investigation
conducted by Fiscal Sumaway, and that he never had any dealings with Albenson or
Benjamin Mendiona, consequently, the check for which he has been accused of having
issued without funds was not issued by him and the signature in said check was not his.

On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal reversed the finding of
Fiscal Sumaway and exonerated respondent Baltao. He also instructed the Trial Fiscal to
move for dismissal of the information filed against Eugenio S. Baltao. Fiscal Castro found
that the signature in PBC Check No. 136361 is not the signature of Eugenio S. Baltao. He
also found that there is no showing in the records of the preliminary investigation that
Eugenio S. Baltao actually received notice of the said investigation. Fiscal Castro then
castigated Fiscal Sumaway for failing to exercise care and prudence in the performance of
his duties, thereby causing injustice to respondent who was not properly notified of the
complaint against him and of the requirement to submit his counter evidence.

Because of the alleged unjust filing of a criminal case against him for allegedly issuing a
check which bounced in violation of Batas Pambansa Bilang 22 for a measly amount of
P2,575.00, respondent Baltao filed before the Regional Trial Court of Quezon City a
complaint for damages against herein petitioners Albenson Enterprises, Jesse Yap, its
owner, and Benjamin Mendiona, its employee.

In its decision, the lower court observed that "the check is drawn against the account of
"E.L. Woodworks," not of Guaranteed Industries of which plaintiff used to be President.
Guaranteed Industries had been inactive and had ceased to exist as a corporation since
1975. . . . . The possibility is that it was with Gene Baltao or Eugenio Baltao III, a son of
plaintiff who had a business on the ground floor of Baltao Building located on V. Mapa
Street, that the defendants may have been dealing with . . . ." (Rollo, pp. 41-42).

The dispositive portion of the trial court 's decision reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants

ordering the latter to pay plaintiff jointly and severally:

1. actual or compensatory damages of P133,350.00;

2. moral damages of P1,000,000.00 (1 million pesos);

3. exemplary damages of P200,000.00;

4. attorney's fees of P100,000.00;

5 costs.

Defendants' counterclaim against plaintiff and claim for damages against Mercantile
Insurance Co. on the bond for the issuance of the writ of attachment at the instance of
plaintiff are hereby dismissed for lack of merit. (Rollo, pp. 38-39).

On appeal, respondent court modified the trial court's decision as follows:

WHEREFORE, the decision appealed from is MODIFIED by reducing the moral damages
awarded therein from P1,000,000.00 to P500,000.00 and the attorney's fees from
P100,000.00 to P50,000.00, said decision being hereby affirmed in all its other aspects.
With costs against appellants. (Rollo, pp. 50-51)

Dissatisfied with the above ruling, petitioners Albenson Enterprises Corp., Jesse Yap, and
Benjamin Mendiona filed the instant Petition, alleging that the appellate court erred in:

1. Concluding that private respondent's cause of action is not one based on malicious
prosecution but one for abuse of rights under Article 21 of the Civil Code notwithstanding
the fact that the basis of a civil action for malicious prosecution is Article 2219 in relation
to Article 21 or Article 2176 of the Civil Code . . . .

2. Concluding that "hitting at and in effect maligning (private respondent) with an unjust
criminal case was, without more, a plain case of abuse of rights by misdirection" and "was
therefore, actionable by itself," and which "became inordinately blatant and grossly
aggravated when . . . (private respondent) was deprived of his basic right to notice and a
fair hearing in the so-called preliminary investigation . . . . "

3. Concluding that petitioner's "actuations in this case were coldly deliberate and
calculated", no evidence having been adduced to support such a sweeping statement.

4. Holding the petitioner corporation, petitioner Yap and petitioner Mendiona jointly and
severally liable without sufficient basis in law and in fact.

5. Awarding respondents

5.1. P133,350.00 as actual or compensatory damages, even in the absence of sufficient

evidence to show that such was actually suffered.

5.2. P500,000.00 as moral damages considering that the evidence in this connection
merely involved private respondent's alleged celebrated status as a businessman, there
being no showing that the act complained of adversely affected private respondent's
reputation or that it resulted to material loss.

5.3. P200,000.00 as exemplary damages despite the fact that petitioners were duly advised
by counsel of their legal recourse.

5.4. P50,000.00 as attorney's fees, no evidence having been adduced to justify such an
award (Rollo, pp. 4-6).

Petitioners contend that the civil case filed in the lower court was one for malicious
prosecution. Citing the case of Madera vs. Lopez (102 SCRA 700 [1981]), they assert that
the absence of malice on their part absolves them from any liability for malicious
prosecution. Private respondent, on the other hand, anchored his complaint for Damages
on Articles 19, 20, and 21 ** of the Civil Code.

Article 19, known to contain what is commonly referred to as the principle of abuse of
rights, sets certain standards which may be observed not only in the exercise of one's
rights but also in the performance of one's duties. These standards are the following: to act
with justice; to give everyone his due; and to observe honesty and good faith. The law,
therefore, recognizes the primordial limitation on all rights: that in their exercise, the
norms of human conduct set forth in Article 19 must be observed. A right, though by itself
legal because recognized or granted by law as such, may nevertheless become the source
of some illegality. When a right is exercised in a manner which does not conform with the
norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be held responsible. Although the requirements
of each provision is different, these three (3) articles are all related to each other. As the
eminent Civilist Senator Arturo Tolentino puts it: "With this article (Article 21), combined
with articles 19 and 20, the scope of our law on civil wrongs has been very greatly
broadened; it has become much more supple and adaptable than the Anglo-American law
on torts. It is now difficult to conceive of any malevolent exercise of a right which could not
be checked by the application of these articles" (Tolentino, 1 Civil Code of the Philippines
72).

There is however, no hard and fast rule which can be applied to determine whether or not
the principle of abuse of rights may be invoked. The question of whether or not the
principle of abuse of rights has been violated, resulting in damages under Articles 20 and
21 or other applicable provision of law, depends on the circumstances of each case. (Globe
Mackay Cable and Radio Corporation vs. Court of Appeals, 176 SCRA 778 [1989]).

The elements of an abuse of right under Article 19 are the following: (1) There is a legal
right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or
injuring another. Article 20 speaks of the general sanction for all other provisions of law
which do not especially provide for their own sanction (Tolentino, supra, p. 71). Thus,
anyone who, whether willfully or negligently, in the exercise of his legal right or duty,
causes damage to another, shall indemnify his victim for injuries suffered thereby. Article
21 deals with acts contra bonus mores, and has the following elements: 1) There is an act
which is legal; 2) but which is contrary to morals, good custom, public order, or public
policy; 3) and it is done with intent to injure.

Thus, under any of these three (3) provisions of law, an act which causes injury to another
may be made the basis for an award of damages.

There is a common element under Articles 19 and 21, and that is, the act must be
intentional. However, Article 20 does not distinguish: the act may be done either "willfully",
or "negligently". The trial court as well as the respondent appellate court mistakenly
lumped these three (3) articles together, and cited the same as the bases for the award of
damages in the civil complaint filed against petitioners, thus:

With the foregoing legal provisions (Articles 19, 20, and 21) in focus, there is not much
difficulty in ascertaining the means by which appellants' first assigned error should be
resolved, given the admitted fact that when there was an attempt to collect the amount of
P2,575.00, the defendants were explicitly warned that plaintiff Eugenio S. Baltao is not the
Eugenio Baltao defendants had been dealing with (supra, p. 5). When the defendants
nevertheless insisted and persisted in filing a case a criminal case no less against
plaintiff, said defendants ran afoul of the legal provisions (Articles 19, 20, and 21 of the
Civil Code) cited by the lower court and heretofore quoted (supra).

Defendants, not having been paid the amount of P2,575.00, certainly had the right to
complain. But that right is limited by certain constraints. Beyond that limit is the area of
excess, of abuse of rights. (Rollo, pp.
44-45).

Assuming, arguendo, that all the three (3) articles, together and not independently of each
one, could be validly made the bases for an award of damages based on the principle of
"abuse of right", under the circumstances, We see no cogent reason for such an award of
damages to be made in favor of private respondent.

Certainly, petitioners could not be said to have violated the aforestated principle of abuse
of right. What prompted petitioners to file the case for violation of Batas Pambansa Bilang
22 against private respondent was their failure to collect the amount of P2,575.00 due on
a bounced check which they honestly believed was issued to them by private respondent.
Petitioners had conducted inquiries regarding the origin of the check, and yielded the
following results: from the records of the Securities and Exchange Commission, it was
discovered that the President of Guaranteed (the recipient of the unpaid mild steel plates),
was one "Eugenio S. Baltao"; an inquiry with the Ministry of Trade and Industry revealed
that E.L. Woodworks, against whose account the check was drawn, was registered in the
name of one "Eugenio Baltao"; verification with the drawee bank, the Pacific Banking
Corporation, revealed that the signature appearing on the check belonged to one "Eugenio
Baltao".

In a letter dated December 16, 1983, counsel for petitioners wrote private respondent
demanding that he make good the amount of the check. Counsel for private respondent
wrote back and denied, among others, that private respondent ever transacted business
with Albenson Enterprises Corporation; that he ever issued the check in question. Private
respondent's counsel even went further: he made a warning to defendants to check the
veracity of their claim. It is pivotal to note at this juncture that in this same letter, if
indeed private respondent wanted to clear himself from the baseless accusation made
against his person, he should have made mention of the fact that there are three (3)
persons with the same name, i.e.: Eugenio Baltao, Sr., Eugenio S. Baltao, Jr. (private
respondent), and Eugenio Baltao III (private respondent's son, who as it turned out later,
was the issuer of the check). He, however, failed to do this. The last two Baltaos were doing
business in the same building Baltao Building located at 3267 V. Mapa Street, Sta.
Mesa, Manila. The mild steel plates were ordered in the name of Guaranteed of which
respondent Eugenio S. Baltao is the president and delivered to Guaranteed at Baltao
building. Thus, petitioners had every reason to believe that the Eugenio Baltao who issued
the bouncing check is respondent Eugenio S. Baltao when their counsel wrote respondent
to make good the amount of the check and upon refusal, filed the complaint for violation of
BP Blg. 22.

Private respondent, however, did nothing to clarify the case of mistaken identity at first
hand. Instead, private respondent waited in ambush and thereafter pounced on the
hapless petitioners at a time he thought was propitious by filing an action for damages.
The Court will not countenance this devious scheme.

The criminal complaint filed against private respondent after the latter refused to make
good the amount of the bouncing check despite demand was a sincere attempt on the part
of petitioners to find the best possible means by which they could collect the sum of
money due them. A person who has not been paid an obligation owed to him will naturally
seek ways to compel the debtor to pay him. It was normal for petitioners to find means to
make the issuer of the check pay the amount thereof. In the absence of a wrongful act or
omission or of fraud or bad faith, moral damages cannot be awarded and that the adverse
result of an action does not per se make the action wrongful and subject the actor to the
payment of damages, for the law could not have meant to impose a penalty on the right to
litigate (Rubio vs. Court of Appeals, 141 SCRA 488 [1986]).

In the case at bar, private respondent does not deny that the mild steel plates were
ordered by and delivered to Guaranteed at Baltao building and as part payment thereof,
the bouncing check was issued by one Eugenio Baltao. Neither had private respondent
conveyed to petitioner that there are two Eugenio Baltaos conducting business in the same
building he and his son Eugenio Baltao III. Considering that Guaranteed, which
received the goods in payment of which the bouncing check was issued is owned by
respondent, petitioner acted in good faith and probable cause in filing the complaint before
the provincial fiscal.

To constitute malicious prosecution, there must be proof that the prosecution was
prompted by a sinister design to vex and humiliate a person, and that it was initiated
deliberately by the defendant knowing that his charges were false and groundless.
Concededly, the mere act of submitting a case to the authorities for prosecution does not
make one liable for malicious prosecution. (Manila Gas Corporation vs. Court of Appeals,
100 SCRA 602 [1980]). Still, private respondent argues that liability under Articles 19, 20,
and 21 of the Civil Code is so encompassing that it likewise includes liability for damages
for malicious prosecution under Article 2219 (8). True, a civil action for damages for
malicious prosecution is allowed under the New Civil Code, more specifically Articles 19,
20, 26, 29, 32, 33, 35, and 2219 (8) thereof. In order that such a case can prosper,
however, the following three (3) elements must be present, to wit: (1) The fact of the
prosecution and the further fact that the defendant was himself the prosecutor, and that
the action was finally terminated with an acquittal; (2) That in bringing the action, the
prosecutor acted without probable cause; (3) The prosecutor was actuated or impelled by
legal malice (Lao vs. Court of Appeals, 199 SCRA 58, [1991]).

Thus, a party injured by the filing of a court case against him, even if he is later on
absolved, may file a case for damages grounded either on the principle of abuse of rights,
or on malicious prosecution. As earlier stated, a complaint for damages based on
malicious prosecution will prosper only if the three (3) elements aforecited are shown to
exist. In the case at bar, the second and third elements were not shown to exist. It is well-
settled that one cannot be held liable for maliciously instituting a prosecution where one
has acted with probable cause. "Probable cause is the existence of such facts and
circumstances as would excite the belief, in a reasonable mind, acting on the facts within
the knowledge of the prosecutor, that the person charged was guilty of the crime for which
he was prosecuted. In other words, a suit will lie only in cases where a legal prosecution
has been carried on without probable cause. The reason for this rule is that it would be a
very great discouragement to public justice, if prosecutors, who had tolerable ground of
suspicion, were liable to be sued at law when their indictment miscarried" (Que vs.
Intermediate Appellate Court, 169 SCRA 137 [1989]).

The presence of probable cause signifies, as a legal consequence, the absence of malice. In
the instant case, it is evident that petitioners were not motivated by malicious intent or by
sinister design to unduly harass private respondent, but only by a well-founded anxiety to
protect their rights when they filed the criminal complaint against private respondent.

To constitute malicious prosecution, there must be proof that the prosecution was
prompted by a sinister design to vex and humiliate a person, that it was initiated
deliberately by the defendant knowing that his charges were false and groundless.
Concededly, the mere act of submitting a case to the authorities for prosecution does not
make one liable for malicious prosecution. Proof and motive that the institution of the
action was prompted by a sinister design to vex and humiliate a person must be clearly
and preponderantly established to entitle the victims to damages (Ibid.).

In the case at bar, there is no proof of a sinister design on the part of petitioners to vex or
humiliate private respondent by instituting the criminal case against him. While
petitioners may have been negligent to some extent in determining the liability of private
respondent for the dishonored check, the same is not so gross or reckless as to amount to
bad faith warranting an award of damages.

The root of the controversy in this case is founded on a case of mistaken identity. It is
possible that with a more assiduous investigation, petitioners would have eventually
discovered that private respondent Eugenio S. Baltao is not the "Eugenio Baltao"
responsible for the dishonored check. However, the record shows that petitioners did exert
considerable effort in order to determine the liability of private respondent. Their
investigation pointed to private respondent as the "Eugenio Baltao" who issued and signed
the dishonored check as the president of the debtor-corporation Guaranteed Enterprises.
Their error in proceeding against the wrong individual was obviously in the nature of an
innocent mistake, and cannot be characterized as having been committed in bad faith.
This error could have been discovered if respondent had submitted his counter-affidavit
before investigating fiscal Sumaway and was immediately rectified by Provincial Fiscal
Mauro Castro upon discovery thereof, i.e., during the reinvestigation resulting in the
dismissal of the complaint.

Furthermore, the adverse result of an action does not per se make the act wrongful and
subject the actor to the payment of moral damages. The law could not have meant to
impose a penalty on the right to litigate, such right is so precious that moral damages may
not be charged on those who may even exercise it erroneously. And an adverse decision
does not ipso facto justify the award of attorney's fees to the winning party (Garcia vs.
Gonzales, 183 SCRA 72 [1990]).

Thus, an award of damages and attorney's fees is unwarranted where the action was filed
in good faith. If damage results from a person's exercising his legal rights, it is damnum
absque injuria (Ilocos Norte Electric Company vs. Court of Appeals, 179 SCRA 5 [1989]).

Coming now to the claim of private respondent for actual or compensatory damages, the
records show that the same was based solely on his allegations without proof to
substantiate the same. He did not present proof of the cost of the medical treatment which
he claimed to have undergone as a result of the nervous breakdown he suffered, nor did
he present proof of the actual loss to his business caused by the unjust litigation against
him. In determining actual damages, the court cannot rely on speculation, conjectures or
guesswork as to the amount. Without the actual proof of loss, the award of actual
damages becomes erroneous (Guilatco vs. City of Dagupan, 171 SCRA 382 [1989]).

Actual and compensatory damages are those recoverable because of pecuniary loss in
business, trade, property, profession, job or occupation and the same must be proved,
otherwise, if the proof is flimsy and unsubstantiated, no damages will be given (Rubio vs.
Court of Appeals, 141 SCRA 488 [1986]). For these reasons, it was gravely erroneous for
respondent court to have affirmed the award of actual damages in favor of private
respondent in the absence of proof thereof.
Where there is no evidence of the other party having acted in wanton, fraudulent or
reckless, or oppressive manner, neither may exemplary damages be awarded (Dee Hua
Liong Electrical Equipment Corporation vs. Reyes, 145 SCRA 488 [1986]).

As to the award of attorney's fees, it is well-settled that the same is the exception rather
than the general rule. Needless to say, the award of attorney's fees must be disallowed
where the award of exemplary damages is eliminated (Article 2208, Civil Code; Agustin vs.
Court of Appeals, 186 SCRA 375 [1990]). Moreover, in view of the fact that there was no
malicious prosecution against private respondent, attorney's fees cannot be awarded him
on that ground.

In the final analysis, there is no proof or showing that petitioners acted maliciously or in
bad faith in the filing of the case against private respondent. Consequently, in the absence
of proof of fraud and bad faith committed by petitioners, they cannot be held liable for
damages (Escritor, Jr. vs. Intermediate Appellate Court, 155 SCRA 577 [1987]). No
damages can be awarded in the instant case, whether based on the principle of abuse of
rights, or for malicious prosecution. The questioned judgment in the instant case attests to
the propensity of trial judges to award damages without basis. Lower courts are hereby
cautioned anew against awarding unconscionable sums as damages without bases
therefor.

WHEREFORE, the petition is GRANTED and the decision of the Court of Appeals in C.A.
G.R. C.V. No. 14948 dated May 13, 1989, is hereby REVERSED and SET ASIDE. Costs
against respondent Baltao.

SO ORDERED.

VELAYO VS. SHELL CO

BAUTISTA ANGELO, J.:

On December 17, 1948, Alfredo M. Velayo as assignees of the insolvent Commercial

Airlines, Inc., instituted an action against Shell Company of the Philippine Islands, Ltd., in
the Court of First Instance of Manila for injunction and damages (Civil Case No. 6966). On
October 26, 1951, a complaint in intervention was filed by Alfonso Sycip, Paul Sycip, and
Yek Trading Corporation, and on November 14, 1951, by Mabasa & Company.

After trial wherein plaintiff presented evidence in his behalf, but none in behalf of
intervenors, the court rendered decision dismissing plaintiff's complaint as well as those
filed by the intervenors. On March 31, 1954, counsel for plaintiff filed a notice of appeal,
appeal bond, and record on appeal in behalf only of plaintiff even if they also represent the
intervenors, which in due time were approved, the Court instructing its clerk to forward
the record on appeal to the Supreme Court together with all the evidence presented in the
case. This instruction was actually complied with.

On August 31, 1954, the Deputy Clerk of the Supreme Court notified counsel of plaintiff
that the record as well as the evidence have already been received and that they should file
their brief within 45 days from receipt of the notice. On November 2, 1954, counsel filed
their brief for appellants. On November 6, 1954, or 7 months after the judgment had
become final as against the intervenors, and 4 days after counsel for appellants had
submitted the latter's brief, counsel for intervenors filed with the Supreme Court a petition
for correction of the record on appeal in order to enable them to insert therein the names
of the intervenors as appellants, the petition being based, among others, on the ground
that the omission of the names of the intervenors in said record on appeal was due to the
mistake of the typist who prepared it while the attorney in charge was on vacation. The
petition was vigorously opposed by counsel for defendant, contending that the same would
serve no purpose, whatsoever considering that the intervenors had not presented any
evidence in support of their claim, aside from the fact that the alleged absence of the
attorney of the intervenors cannot constitute a justification for the alleged omission of the
intervenors as appellants. On November 12, 1954, the Court denied the petition. Counsel
intervenors moved for a reconsideration of the order, but the same was denied.

On November 19, 1954, counsel for intervenors filed with the lower court a petition for
relief under Rule 38 of the Rules of Court, wherein he reiterated the same grounds they
alleged in the petition for correction filed by them in the Supreme Court, which petition
was denied on November 27, 1954, for having been filed outside the reglementary period
fixed in said Rule 38. Counsel filed a motion for reconsideration, which was again denied,
the Court stating that "no judgment or order has been rendered, nor any other proceeding
taken by this Court on the right of the intervenors to appeal."

On December 20, 1954, counsel filed once more a motion to amend the record on appeal
based on grounds identical with those alleged in the petition for correction filed before the
Supreme Court. On December 27, 1954, the lower court denied the motion. On January 6,
1955, counsel filed a petition for relief from this last order entered on December 27, 1954,
to which counsel for defendant filed an opposition. On February 5, 1955, hearing was had
on both the petition for relief and the opposition, and on February 9, 1955, the petition
was denied on the ground that the case is already before the Supreme Court on appeal. It
is from this order that the counsel for intervenors has taken the appeal now before us.

The instant appeal has no merit.

To begin with, the only remedy which appellants now seek in this appeal is the inclusion of
the intervenors as appellants in the appeal from the decision rendered in the main case,
but this remedy has already been denied twice by this Court, first, in its resolution of
November 12, 1954 denying their petition for correction of the record on appeal, and,
second, in denying their motion for reconsideration of said resolution. It should be noted
that the grounds relied upon in this appeal are the same grounds alleged in said petition
for correction.

In the second place, the intervenors have no right or reason to appeal from the decision in
the main case, it appearing that they did not introduce any evidence during the trial in
support of their complaint, which shows that their appeal would be merely pro-forma. And,
in any event, they made the attempt to amend the record on appeal seven (7) months after
the decision had become final against them.

In the third place, the intervenors have no right or reason to file a petition for relief under
Rule 38 of the Rules of Court from the order of the lower court issued on December 27,
1954, for the reason that the same was entered upon a motion filed by them. Indeed they
cannot reasonably assert that the order was entered against them through fraud, accident,
mistake, or negligence. The fraud mentioned in Rule 38 is the fraud committed by the
adverse party and certainly the same cannot be attributed to the Court.

Finally, it appears that the main case has already been decided by this Court on the
merits on October 31, 1956, reversing the decision of the lower court and awarding
damages to plaintiff, which apparently is the very purpose which the intervenors seek to
accomplish in joining the appeal as co-appellants. This appeal, therefore, has already
become moot.

Wherefore, the order appealed from is affirmed, with costs against appellants.

GLOBE MACKAY CABLE & RADIO CORP. VS CA

CORTES, J.:

Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable
and Radio Corporation (GLOBE MACKAY) in a dual capacity as a purchasing agent and
administrative assistant to the engineering operations manager. In 1972, GLOBE MACKAY
discovered fictitious purchases and other fraudulent transactions for which it lost several
thousands of pesos.

According to private respondent it was he who actually discovered the anomalies and
reported them on November 10, 1972 to his immediate superior Eduardo T. Ferraren and
to petitioner Herbert C. Hendry who was then the Executive Vice-President and General
Manager of GLOBE MACKAY.

On November 11, 1972, one day after private respondent Tobias made the report,
petitioner Hendry confronted him by stating that he was the number one suspect, and
ordered him to take a one week forced leave, not to communicate with the office, to leave
his table drawers open, and to leave the office keys.

On November 20, 1972, when private respondent Tobias returned to work after the forced
leave, petitioner Hendry went up to him and called him a "crook" and a "swindler." Tobias
was then ordered to take a lie detector test. He was also instructed to submit specimen of
his handwriting, signature, and initials for examination by the police investigators to
determine his complicity in the anomalies.
On December 6,1972, the Manila police investigators submitted a laboratory crime report
(Exh. "A") clearing private respondent of participation in the anomalies.

Not satisfied with the police report, petitioners hired a private investigator, retired Col.
Jose G. Fernandez, who on December 10, 1972, submitted a report (Exh. "2") finding
Tobias guilty. This report however expressly stated that further investigation was still to be
conducted.

Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum

suspending Tobias from work preparatory to the filing of criminal charges against him.

On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document
Examiner, after investigating other documents pertaining to the alleged anomalous
transactions, submitted a second laboratory crime report (Exh. "B") reiterating his
previous finding that the handwritings, signatures, and initials appearing in the checks
and other documents involved in the fraudulent transactions were not those of Tobias. The
lie detector tests conducted on Tobias also yielded negative results.

Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact
that the report of the private investigator, was, by its own terms, not yet complete,
petitioners filed with the City Fiscal of Manila a complaint for estafa through falsification of
commercial documents, later amended to just estafa. Subsequently five other criminal
complaints were filed against Tobias, four of which were for estafa through Falsification of
commercial document while the fifth was for of Article 290 of' the Revised Penal Code
(Discovering Secrets Through Seizure of Correspondence).lwph1.t Two of these
complaints were refiled with the Judge Advocate General's Office, which however,
remanded them to the fiscal's office. All of the six criminal complaints were dismissed by
the fiscal. Petitioners appealed four of the fiscal's resolutions dismissing the criminal
complaints with the Secretary of Justice, who, however, affirmed their dismissal.

In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners
that his employment has been terminated effective December 13, 1972. Whereupon,
Tobias filed a complaint for illegal dismissal. The labor arbiter dismissed the complaint.
On appeal, the National Labor Relations Commission (NLRC) reversed the labor arbiter's
decision. However, the Secretary of Labor, acting on petitioners' appeal from the NLRC
ruling, reinstated the labor arbiter's decision. Tobias appealed the Secretary of Labor's
order with the Office of the President. During the pendency of the appeal with said office,
petitioners and private respondent Tobias entered into a compromise agreement regarding
the latter's complaint for illegal dismissal.

Unemployed, Tobias sought employment with the Republic Telephone Company

(RETELCO). However, petitioner Hendry, without being asked by RETELCO, wrote a letter
to the latter stating that Tobias was dismissed by GLOBE MACKAY due to dishonesty.

Private respondent Tobias filed a civil case for damages anchored on alleged unlawful,
malicious, oppressive, and abusive acts of petitioners. Petitioner Hendry, claiming illness,
did not testify during the hearings. The Regional Trial Court (RTC) of Manila, Branch IX,
through Judge Manuel T. Reyes rendered judgment in favor of private respondent by
ordering petitioners to pay him eighty thousand pesos (P80,000.00) as actual damages,
two hundred thousand pesos (P200,000.00) as moral damages, twenty thousand pesos
(P20,000.00) as exemplary damages, thirty thousand pesos (P30,000.00) as attorney's fees,
and costs. Petitioners appealed the RTC decision to the Court of Appeals. On the other
hand, Tobias appealed as to the amount of damages. However, the Court of Appeals, an a
decision dated August 31, 1987 affirmed the RTC decision in toto. Petitioners' motion for
reconsideration having been denied, the instant petition for review on certiorari was filed.

The main issue in this case is whether or not petitioners are liable for damages to private
respondent.

Petitioners contend that they could not be made liable for damages in the lawful exercise
of their right to dismiss private respondent.

On the other hand, private respondent contends that because of petitioners' abusive
manner in dismissing him as well as for the inhuman treatment he got from them, the
Petitioners must indemnify him for the damage that he had suffered.

One of the more notable innovations of the New Civil Code is the codification of "some
basic principles that are to be observed for the rightful relationship between human beings
and for the stability of the social order." [REPORT ON THE CODE COMMISSION ON THE
PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to
remedy the defect of the old Code which merely stated the effects of the law, but failed to
draw out its spirit, incorporated certain fundamental precepts which were "designed to
indicate certain norms that spring from the fountain of good conscience" and which were
also meant to serve as "guides for human conduct [that] should run as golden threads
through society, to the end that law may approach its supreme ideal, which is the sway
and dominance of justice" (Id.) Foremost among these principles is that pronounced in
Article 19 which provides:

Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.

This article, known to contain what is commonly referred to as the principle of abuse of
rights, sets certain standards which must be observed not only in the exercise of one's
rights but also in the performance of one's duties. These standards are the following: to act
with justice; to give everyone his due; and to observe honesty and good faith. The law,
therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms
of human conduct set forth in Article 19 must be observed. A right, though by itself legal
because recognized or granted by law as such, may nevertheless become the source of
some illegality. When a right is exercised in a manner which does not conform with the
norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be held responsible. But while Article 19 lays
down a rule of conduct for the government of human relations and for the maintenance of
social order, it does not provide a remedy for its violation. Generally, an action for damages
under either Article 20 or Article 21 would be proper.

Article 20, which pertains to damage arising from a violation of law, provides that:

Art. 20. Every person who contrary to law, wilfully or negligently causes damage to
another, shall indemnify the latter for the same.

However, in the case at bar, petitioners claim that they did not violate any provision of law
since they were merely exercising their legal right to dismiss private respondent. This does
not, however, leave private respondent with no relief because Article 21 of the Civil Code
provides that:

Art. 21. Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage.

This article, adopted to remedy the "countless gaps in the statutes, which leave so many
victims of moral wrongs helpless, even though they have actually suffered material and
moral injury" [Id.] should "vouchsafe adequate legal remedy for that untold number of
moral wrongs which it is impossible for human foresight to provide for specifically in the
statutes" [Id. it p. 40; See also PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237,
247].

In determining whether or not the principle of abuse of rights may be invoked, there is no
rigid test which can be applied. While the Court has not hesitated to apply Article 19
whether the legal and factual circumstances called for its application [See for e.g., Velayo
v. Shell Co. of the Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra; Grand Union
Supermarket, Inc. v. Espino, Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953;
PAL v. CA, G.R. No. L-46558, July 31,1981,106 SCRA 391; United General Industries, Inc,
v. Paler G.R. No. L-30205, March 15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911,
August 21, 1987, 153 SCRA 183] the question of whether or not the principle of abuse of
rights has been violated resulting in damages under Article 20 or Article 21 or other
applicable provision of law, depends on the circumstances of each case. And in the instant
case, the Court, after examining the record and considering certain significant
circumstances, finds that all petitioners have indeed abused the right that they invoke,
causing damage to private respondent and for which the latter must now be indemnified.

The trial court made a finding that notwithstanding the fact that it was private respondent
Tobias who reported the possible existence of anomalous transactions, petitioner Hendry
"showed belligerence and told plaintiff (private respondent herein) that he was the number
one suspect and to take a one week vacation leave, not to communicate with the office, to
leave his table drawers open, and to leave his keys to said defendant (petitioner Hendry)"
[RTC Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But regardless of
whether or not it was private respondent Tobias who reported the anomalies to petitioners,
the latter's reaction towards the former upon uncovering the anomalies was less than civil.
An employer who harbors suspicions that an employee has committed dishonesty might be
justified in taking the appropriate action such as ordering an investigation and directing
the employee to go on a leave. Firmness and the resolve to uncover the truth would also be
expected from such employer. But the high-handed treatment accorded Tobias by
petitioners was certainly uncalled for. And this reprehensible attitude of petitioners was to
continue when private respondent returned to work on November 20, 1972 after his one
week forced leave. Upon reporting for work, Tobias was confronted by Hendry who said.
"Tobby, you are the crook and swindler in this company." Considering that the first report
made by the police investigators was submitted only on December 10, 1972 [See Exh. A]
the statement made by petitioner Hendry was baseless. The imputation of guilt without
basis and the pattern of harassment during the investigations of Tobias transgress the
standards of human conduct set forth in Article 19 of the Civil Code. The Court has
already ruled that the right of the employer to dismiss an employee should not be
confused with the manner in which the right is exercised and the effects flowing therefrom.
If the dismissal is done abusively, then the employer is liable for damages to the employee
[Quisaba v. Sta. Ines-Melale Veneer and Plywood Inc., G.R. No. L-38088, August 30, 1974,
58 SCRA 771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L-21871,
September 27,1966, 18 SCRA 107] Under the circumstances of the instant case, the
petitioners clearly failed to exercise in a legitimate manner their right to dismiss Tobias,
giving the latter the right to recover damages under Article 19 in relation to Article 21 of
the Civil Code.

But petitioners were not content with just dismissing Tobias. Several other tortious acts
were committed by petitioners against Tobias after the latter's termination from work.
Towards the latter part of January, 1973, after the filing of the first of six criminal
complaints against Tobias, the latter talked to Hendry to protest the actions taken against
him. In response, Hendry cut short Tobias' protestations by telling him to just confess or
else the company would file a hundred more cases against him until he landed in jail.
Hendry added that, "You Filipinos cannot be trusted." The threat unmasked petitioner's
bad faith in the various actions taken against Tobias. On the other hand, the scornful
remark about Filipinos as well as Hendry's earlier statements about Tobias being a "crook"
and "swindler" are clear violations of 'Tobias' personal dignity [See Article 26, Civil Code].

The next tortious act committed by petitioners was the writing of a letter to RETELCO
sometime in October 1974, stating that Tobias had been dismissed by GLOBE MACKAY
due to dishonesty. Because of the letter, Tobias failed to gain employment with RETELCO
and as a result of which, Tobias remained unemployed for a longer period of time. For this
further damage suffered by Tobias, petitioners must likewise be held liable for damages
consistent with Article 2176 of the Civil Code. Petitioners, however, contend that they have
a "moral, if not legal, duty to forewarn other employers of the kind of employee the plaintiff
(private respondent herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim
that "it is the accepted moral and societal obligation of every man to advise or warn his
fellowmen of any threat or danger to the latter's life, honor or property. And this includes
warning one's brethren of the possible dangers involved in dealing with, or accepting into
confidence, a man whose honesty and integrity is suspect" [Id.]. These arguments, rather
than justify petitioners' act, reveal a seeming obsession to prevent Tobias from getting a
job, even after almost two years from the time Tobias was dismissed.

Finally, there is the matter of the filing by petitioners of six criminal complaints against
Tobias. Petitioners contend that there is no case against them for malicious prosecution
and that they cannot be "penalized for exercising their right and prerogative of seeking
justice by filing criminal complaints against an employee who was their principal suspect
in the commission of forgeries and in the perpetration of anomalous transactions which
defrauded them of substantial sums of money" [Petition, p. 10, Rollo, p. 11].

While sound principles of justice and public policy dictate that persons shall have free
resort to the courts for redress of wrongs and vindication of their rights [Buenaventura v.
Sto. Domingo, 103 Phil. 239 (1958)], the right to institute criminal prosecutions can not be
exercised maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30,
1971, 38 SCRA 5871.] Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May 31,
1961, 2 SCRA 337, the Court held that the right to file criminal complaints should not be
used as a weapon to force an alleged debtor to pay an indebtedness. To do so would be a
clear perversion of the function of the criminal processes and of the courts of justice. And
in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20 SCRA 536 the Court upheld the
judgment against the petitioner for actual and moral damages and attorney's fees after
making a finding that petitioner, with persistence, filed at least six criminal complaints
against respondent, all of which were dismissed.
To constitute malicious prosecution, there must be proof that the prosecution was
prompted by a design to vex and humiliate a person and that it was initiated deliberately
by the defendant knowing that the charges were false and groundless [Manila Gas
Corporation v. CA, G.R. No. L-44190, October 30,1980, 100 SCRA 602]. Concededly, the
filing of a suit by itself, does not render a person liable for malicious prosecution [Inhelder
Corporation v. CA, G.R. No. 52358, May 301983122 SCRA 576]. The mere dismissal by the
fiscal of the criminal complaint is not a ground for an award of damages for malicious
prosecution if there is no competent evidence to show that the complainant had acted in
bad faith [Sison v. David, G.R. No. L-11268, January 28,1961, 1 SCRA 60].

In the instant case, however, the trial court made a finding that petitioners acted in bad
faith in filing the criminal complaints against Tobias, observing that:

xxx

Defendants (petitioners herein) filed with the Fiscal's Office of Manila a total of six (6)
criminal cases, five (5) of which were for estafa thru falsification of commercial document
and one for violation of Art. 290 of the Revised Penal Code "discovering secrets thru
seizure of correspondence," and all were dismissed for insufficiency or lack of evidence."
The dismissal of four (4) of the cases was appealed to the Ministry of Justice, but said
Ministry invariably sustained the dismissal of the cases. As above adverted to, two of these
cases were refiled with the Judge Advocate General's Office of the Armed Forces of the
Philippines to railroad plaintiffs arrest and detention in the military stockade, but this was
frustrated by a presidential decree transferring criminal cases involving civilians to the
civil courts.

xxx

To be sure, when despite the two (2) police reports embodying the findings of Lt. Dioscoro
Tagle, Chief Document Examiner of the Manila Police Department, clearing plaintiff of
participation or involvement in the fraudulent transactions complained of, despite the
negative results of the lie detector tests which defendants compelled plaintiff to undergo,
and although the police investigation was "still under follow-up and a supplementary
report will be submitted after all the evidence has been gathered," defendants hastily filed
six (6) criminal cases with the city Fiscal's Office of Manila, five (5) for estafa thru
falsification of commercial document and one (1) for violation of Art. 290 of the Revised
Penal Code, so much so that as was to be expected, all six (6) cases were dismissed, with
one of the investigating fiscals, Asst. Fiscal de Guia, commenting in one case that, "Indeed,
the haphazard way this case was investigated is evident. Evident likewise is the flurry and
haste in the filing of this case against respondent Tobias," there can be no mistaking that
defendants would not but be motivated by malicious and unlawful intent to harass,
oppress, and cause damage to plaintiff.

xxx

[RTC Decision, pp. 5-6; Rollo, pp. 235-236].

In addition to the observations made by the trial court, the Court finds it significant that
the criminal complaints were filed during the pendency of the illegal dismissal case filed by
Tobias against petitioners. This explains the haste in which the complaints were filed,
which the trial court earlier noted. But petitioners, to prove their good faith, point to the
fact that only six complaints were filed against Tobias when they could have allegedly filed
one hundred cases, considering the number of anomalous transactions committed against
GLOBE MACKAY. However, petitioners' good faith is belied by the threat made by Hendry
after the filing of the first complaint that one hundred more cases would be filed against
Tobias. In effect, the possible filing of one hundred more cases was made to hang like the
sword of Damocles over the head of Tobias. In fine, considering the haste in which the
criminal complaints were filed, the fact that they were filed during the pendency of the
illegal dismissal case against petitioners, the threat made by Hendry, the fact that the
cases were filed notwithstanding the two police reports exculpating Tobias from
involvement in the anomalies committed against GLOBE MACKAY, coupled by the
eventual dismissal of all the cases, the Court is led into no other conclusion than that
petitioners were motivated by malicious intent in filing the six criminal complaints against
Tobias.

Petitioners next contend that the award of damages was excessive. In the complaint filed
against petitioners, Tobias prayed for the following: one hundred thousand pesos
(P100,000.00) as actual damages; fifty thousand pesos (P50,000.00) as exemplary
damages; eight hundred thousand pesos (P800,000.00) as moral damages; fifty thousand
pesos (P50,000.00) as attorney's fees; and costs. The trial court, after making a
computation of the damages incurred by Tobias [See RTC Decision, pp. 7-8; Rollo, pp.
154-1551, awarded him the following: eighty thousand pesos (P80,000.00) as actual
damages; two hundred thousand pesos (P200,000.00) as moral damages; twenty thousand
pesos (P20,000.00) as exemplary damages; thirty thousand pesos (P30,000.00) as
attorney's fees; and, costs. It must be underscored that petitioners have been guilty of
committing several actionable tortious acts, i.e., the abusive manner in which they
dismissed Tobias from work including the baseless imputation of guilt and the harassment
during the investigations; the defamatory language heaped on Tobias as well as the
scornful remark on Filipinos; the poison letter sent to RETELCO which resulted in Tobias'
loss of possible employment; and, the malicious filing of the criminal complaints.
Considering the extent of the damage wrought on Tobias, the Court finds that, contrary to
petitioners' contention, the amount of damages awarded to Tobias was reasonable under
the circumstances.

Yet, petitioners still insist that the award of damages was improper, invoking the principle
of damnum absque injuria. It is argued that "[t]he only probable actual damage that
plaintiff (private respondent herein) could have suffered was a direct result of his having
been dismissed from his employment, which was a valid and legal act of the defendants-
appellants (petitioners herein).lwph1.t " [Petition, p. 17; Rollo, p. 18].

According to the principle of damnum absque injuria, damage or loss which does not
constitute a violation of a legal right or amount to a legal wrong is not actionable [Escano
v. CA, G.R. No. L-47207, September 25, 1980, 100 SCRA 197; See also Gilchrist v. Cuddy
29 Phil, 542 (1915); The Board of Liquidators v. Kalaw, G.R. No. L-18805, August 14,
1967, 20 SCRA 987]. This principle finds no application in this case. It bears repeating
that even granting that petitioners might have had the right to dismiss Tobias from work,
the abusive manner in which that right was exercised amounted to a legal wrong for which
petitioners must now be held liable. Moreover, the damage incurred by Tobias was not
only in connection with the abusive manner in which he was dismissed but was also the
result of several other quasi-delictual acts committed by petitioners.

Petitioners next question the award of moral damages. However, the Court has already
ruled in Wassmer v. Velez, G.R. No. L-20089, December 26, 1964, 12 SCRA 648, 653, that
[p]er express provision of Article 2219 (10) of the New Civil Code, moral damages are
recoverable in the cases mentioned in Article 21 of said Code." Hence, the Court of Appeals
committed no error in awarding moral damages to Tobias.

Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231
of the Civil Code provides that "[i]n quasi-delicts, exemplary damages may be granted if the
defendant acted with gross negligence," the Court, in Zulueta v. Pan American World
Airways, Inc., G.R. No. L- 28589, January 8, 1973, 49 SCRA 1, ruled that if gross
negligence warrants the award of exemplary damages, with more reason is its imposition
justified when the act performed is deliberate, malicious and tainted with bad faith. As in
the Zuluetacase, the nature of the wrongful acts shown to have been committed by
petitioners against Tobias is sufficient basis for the award of exemplary damages to the
latter.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals in
CA-G.R. CV No. 09055 is AFFIRMED.

SO ORDERED.

RCPI VS CA

PARAS, J.:

Before Us, is a Petition for Review by certiorari of the decision of the Court of Appeals,
modifying the decision of the trial court in a civil case for recovery of damages against
petitioner corporation by reducing the award to private respondent Loreto Dionela of moral
damages from P40,000 to Pl5,000, and attorney's fees from P3,000 to P2,000.

The basis of the complaint against the defendant corporation is a telegram sent through its
Manila Office to the offended party, Loreto Dionela, reading as follows:

176 AS JR 1215PM 9 PAID MANDALUYONG JUL 22-66 LORETO DIONELA CABANGAN

LEGASPI CITY

WIRE ARRIVAL OF CHECK FER

LORETO DIONELA-CABANGAN-WIRE ARRIVAL OF CHECK-PER

115 PM

SA IYO WALANG PAKINABANG DUMATING KA DIYAN-WALA-KANG PADALA DITO KAHIT

BULBUL MO

(p. 19, Annex "A")

Plaintiff-respondent Loreto Dionela alleges that the defamatory words on the telegram sent
to him not only wounded his feelings but also caused him undue embarrassment and
affected adversely his business as well because other people have come to know of said
defamatory words. Defendant corporation as a defense, alleges that the additional words in
Tagalog was a private joke between the sending and receiving operators and that they were
not addressed to or intended for plaintiff and therefore did not form part of the telegram
and that the Tagalog words are not defamatory. The telegram sent through its facilities
was received in its station at Legaspi City. Nobody other than the operator manned the
teletype machine which automatically receives telegrams being transmitted. The said
telegram was detached from the machine and placed inside a sealed envelope and
delivered to plaintiff, obviously as is. The additional words in Tagalog were never noticed
and were included in the telegram when delivered.

The trial court in finding for the plaintiff ruled as follows:

There is no question that the additional words in Tagalog are libelous. They clearly impute
a vice or defect of the plaintiff. Whether or not they were intended for the plaintiff, the
effect on the plaintiff is the same. Any person reading the additional words in Tagalog will
naturally think that they refer to the addressee, the plaintiff. There is no indication from
the face of the telegram that the additional words in Tagalog were sent as a private joke
between the operators of the defendant.

The defendant is sued directly not as an employer. The business of the defendant is to
transmit telegrams. It will open the door to frauds and allow the defendant to act with
impunity if it can escape liability by the simple expedient of showing that its employees
acted beyond the scope of their assigned tasks.

The liability of the defendant is predicated not only on Article 33 of the Civil Code of the
Philippines but on the following articles of said Code:

ART. 19.- Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.

ART. 20.-Every person who, contrary to law, wilfully or negligently causes damage to
another, shall indemnify the latter for the same.

There is sufficient publication of the libelous Tagalog words. The office file of the defendant
containing copies of telegrams received are open and held together only by a metal
fastener. Moreover, they are open to view and inspection by third parties.

It follows that the plaintiff is entitled to damages and attorney's fees. The plaintiff is a
businessman. The libelous Tagalog words must have affected his business and social
standing in the community. The Court fixes the amount of P40,000.00 as the reasonable
amount of moral damages and the amount of P3,000.00 as attorney's fee which the
defendant should pay the plaintiff. (pp. 15-16, Record on Appeal)

The respondent appellate court in its assailed decision confirming the aforegoing findings
of the lower court stated:

The proximate cause, therefore, resulting in injury to appellee, was the failure of the
appellant to take the necessary or precautionary steps to avoid the occurrence of the
humiliating incident now complained of. The company had not imposed any safeguard
against such eventualities and this void in its operating procedure does not speak well of
its concern for their clientele's interests. Negligence here is very patent. This negligence is
imputable to appellant and not to its employees.

The claim that there was no publication of the libelous words in Tagalog is also without
merit. The fact that a carbon copy of the telegram was filed among other telegrams and left
to hang for the public to see, open for inspection by a third party is sufficient publication.
It would have been otherwise perhaps had the telegram been placed and kept in a secured
place where no one may have had a chance to read it without appellee's permission.
The additional Tagalog words at the bottom of the telegram are, as correctly found by the
lower court, libelous per se, and from which malice may be presumed in the absence of
any showing of good intention and justifiable motive on the part of the appellant. The law
implies damages in this instance (Quemel vs. Court of Appeals, L-22794, January 16,
1968; 22 SCRA 44). The award of P40,000.00 as moral damages is hereby reduced to
P15,000.00 and for attorney's fees the amount of P2,000.00 is awarded. (pp. 22-23,
record)

After a motion for reconsideration was denied by the appellate court, petitioner came to Us
with the following:

ASSIGNMENT OF ERRORS

The Honorable Court of Appeals erred in holding that Petitioner-employer should answer
directly and primarily for the civil liability arising from the criminal act of its employee.

II

The Honorable Court of Appeals erred in holding that there was sufficient publication of
the alleged libelous telegram in question, as contemplated by law on libel.

III

The Honorable Court of Appeals erred in holding that the liability of petitioner-company-
employer is predicated on Articles 19 and 20 of the Civil Code, Articles on Human
Relations.

IV

The Honorable Court of Appeals erred in awarding Atty's. fees. (p. 4, Record)

Petitioner's contentions do not merit our consideration. The action for damages was filed
in the lower court directly against respondent corporation not as an employer subsidiarily
liable under the provisions of Article 1161 of the New Civil Code in relation to Art. 103 of
the Revised Penal Code. The cause of action of the private respondent is based on Arts. 19
and 20 of the New Civil Code (supra). As well as on respondent's breach of contract thru
the negligence of its own employees. 1

Petitioner is a domestic corporation engaged in the business of receiving and transmitting

messages. Everytime a person transmits a message through the facilities of the petitioner,
a contract is entered into. Upon receipt of the rate or fee fixed, the petitioner undertakes to
transmit the message accurately. There is no question that in the case at bar, libelous
matters were included in the message transmitted, without the consent or knowledge of
the sender. There is a clear case of breach of contract by the petitioner in adding
extraneous and libelous matters in the message sent to the private respondent. As a
corporation, the petitioner can act only through its employees. Hence the acts of its
employees in receiving and transmitting messages are the acts of the petitioner. To hold
that the petitioner is not liable directly for the acts of its employees in the pursuit of
petitioner's business is to deprive the general public availing of the services of the
petitioner of an effective and adequate remedy. In most cases, negligence must be proved
in order that plaintiff may recover. However, since negligence may be hard to substantiate
in some cases, we may apply the doctrine of RES IPSA LOQUITUR (the thing speaks for
itself), by considering the presence of facts or circumstances surrounding the injury.

WHEREFORE, premises considered, the judgment of the appellate court is hereby

AFFIRMED.

SO ORDERED.

VALENZUELA VS CA

KAPUNAN, J.:

These two petitions for review on certiorari under Rule 45 of the Revised Rules of Court
stem from an action to recover damages by petitioner Lourdes Valenzuela in the Regional
Trial Court of Quezon City for injuries sustained by her in a vehicular accident in the early
morning of June 24, 1990. The facts found by the trial court are succinctly summarized by
the Court of Appeals below:
This is an action to recover damages based on quasi-delict, for serious physical injuries
sustained in a vehicular accident.

Plaintiff's version of the accident is as follows: At around 2:00 in the morning of June 24,
1990, plaintiff Ma. Lourdes Valenzuela was driving a blue Mitsubishi lancer with Plate No.
FFU 542 from her restaurant at Marcos highway to her home at Palanza Street, Araneta
Avenue. She was travelling along Aurora Blvd. with a companion, Cecilia Ramon, heading
towards the direction of Manila. Before reaching A. Lake Street, she noticed something
wrong with her tires; she stopped at a lighted place where there were people, to verify
whether she had a flat tire and to solicit help if needed. Having been told by the people
present that her rear right tire was flat and that she cannot reach her home in that car's
condition, she parked along the sidewalk, about 1-1/2 feet away, put on her emergency
lights, alighted from the car, and went to the rear to open the trunk. She was standing at
the left side of the rear of her car pointing to the tools to a man who will help her fix the
tire when she was suddenly bumped by a 1987 Mitsubishi Lancer driven by defendant
Richard Li and registered in the name of defendant Alexander Commercial, Inc. Because of
the impact plaintiff was thrown against the windshield of the car of the defendant, which
was destroyed, and then fell to the ground. She was pulled out from under defendant's
car. Plaintiff's left leg was severed up to the middle of her thigh, with only some skin and
sucle connected to the rest of the body. She was brought to the UERM Medical Memorial
Center where she was found to have a "traumatic amputation, leg, left up to distal thigh
(above knee)". She was confined in the hospital for twenty (20) days and was eventually
fitted with an artificial leg. The expenses for the hospital confinement (P120,000.00) and
the cost of the artificial leg (P27,000.00) were paid by defendants from the car insurance.

In her complaint, plaintiff prayed for moral damages in the amount of P1 million,
exemplary damages in the amount of P100,000.00 and other medical and related expenses
amounting to a total of P180,000.00, including loss of expected earnings.

Defendant Richard Li denied that he was negligent. He was on his way home, travelling at
55 kph; considering that it was raining, visibility was affected and the road was wet.
Traffic was light. He testified that he was driving along the inner portion of the right lane of
Aurora Blvd. towards the direction of Araneta Avenue, when he was suddenly confronted,
in the vicinity of A. Lake Street, San Juan, with a car coming from the opposite direction,
travelling at 80 kph, with "full bright lights". Temporarily blinded, he instinctively swerved
to the right to avoid colliding with the oncoming vehicle, and bumped plaintiff's car, which
he did not see because it was midnight blue in color, with no parking lights or early
warning device, and the area was poorly lighted. He alleged in his defense that the left rear
portion of plaintiff's car was protruding as it was then "at a standstill diagonally" on the
outer portion of the right lane towards Araneta Avenue (par. 18, Answer). He confirmed the
testimony of plaintiff's witness that after being bumped the car of the plaintiff swerved to
the right and hit another car parked on the sidewalk. Defendants counterclaimed for
damages, alleging that plaintiff was reckless or negligent, as she was not a licensed driver.

The police investigator, Pfc. Felic Ramos, who prepared the vehicular accident report and
the sketch of the three cars involved in the accident, testified that the plaintiff's car was
"near the sidewalk"; this witness did not remember whether the hazard lights of plaintiff's
car were on, and did not notice if there was an early warning device; there was a street
light at the corner of Aurora Blvd. and F. Roman, about 100 meters away. It was not
mostly dark, i.e. "things can be seen" (p. 16, tsn, Oct. 28, 1991).

A witness for the plaintiff, Rogelio Rodriguez, testified that after plaintiff alighted from her
car and opened the trunk compartment, defendant's car came approaching very fast ten
meters from the scene; the car was "zigzagging". The rear left side of plaintiff's car was
bumped by the front right portion of defendant's car; as a consequence, the plaintiff's car
swerved to the right and hit the parked car on the sidewalk. Plaintiff was thrown to the
windshield of defendant's car, which was destroyed, and landed under the car. He stated
that defendant was under the influence of liquor as he could "smell it very well" (pp. 43,
79, tsn, June 17, 1991).

After trial, the lower court sustained the plaintiff's submissions and found defendant
Richard Li guilty of gross negligence and liable for damages under Article 2176 of the Civil
Code. The trial court likewise held Alexander Commercial, Inc., Li's employer, jointly and
severally liable for damages pursuant to Article 2180. It ordered the defendants to jointly
and severally pay the following amounts:

1. P41,840.00, as actual damages, representing the miscellaneous expenses of the plaintiff

as a result of her severed left leg;
2. The sums of (a) P37,500.00, for the unrealized profits because of the stoppage of
plaintiff's Bistro La Conga restaurant three (3) weeks after the accident on June 24, 1990;
(b) P20,000.00, a month, as unrealized profits of the plaintiff in her Bistro La Conga
restaurant, from August, 1990 until the date of this judgment and (c) P30,000.00, a month
for unrealized profits in plaintiff's two (2) beauty salons from July, 1990 until the date of
this decision;

3. P1,000,000.00, in moral damages;

4. P50,000.00, as exemplary damages;

5. P60,000.00, as reasonable attorney's fees; and

6. Costs.

As a result of the trial court's decision, defendants filed an Omnibus Motion for New Trial
and for Reconsideration, citing testimony in Criminal Case O.C. No. 804367 (People vs.
Richard Li), tending to show that the point of impact, as depicted by the pieces of
glass/debris from the parties' cars, appeared to be at the center of the right lane of Aurora
Blvd. The trial court denied the motion. Defendants forthwith filed an appeal with the
respondent Court of Appeals. In a Decision rendered March 30, 1994, the Court of Appeals
found that there was "ample basis from the evidence of record for the trial court's finding
that the plaintiff's car was properly parked at the right, beside the sidewalk when it was
bumped by defendant's car."1 Dismissing the defendants' argument that the plaintiff's car
was improperly parked, almost at the center of the road, the respondent court noted that
evidence which was supposed to prove that the car was at or near center of the right lane
was never presented during the trial of the case. 2 The respondent court furthermore
observed that:

Defendant Li's testimony that he was driving at a safe speed of 55 km./hour is self
serving; it was not corroborated. It was in fact contradicted by eyewitness Rodriguez who
stated that he was outside his beerhouse located at Aurora Boulevard after A. Lake Street,
at or about 2:00 a.m. of June 24, 1990 when his attention was caught by a beautiful lady
(referring to the plaintiff) alighting from her car and opening the trunk compartment; he
noticed the car of Richard Li "approaching very fast ten (10) meters away from the scene";
defendant's car was zigzagging", although there were no holes and hazards on the street,
and "bumped the leg of the plaintiff" who was thrown against the windshield of defendant's
care, causing its destruction. He came to the rescue of the plaintiff, who was pulled out
from under defendant's car and was able to say "hurting words" to Richard Li because he
noticed that the latter was under the influence of liquor, because he "could smell it very
well" (p. 36, et. seq., tsn, June 17, 1991). He knew that plaintiff owned a beerhouse in Sta.
Mesa in the 1970's, but did not know either plaintiff or defendant Li before the accident.

In agreeing with the trial court that the defendant Li was liable for the injuries sustained
by the plaintiff, the Court of Appeals, in its decision, however, absolved the Li's employer,
Alexander Commercial, Inc. from any liability towards petitioner Lourdes Valenzuela and
reduced the amount of moral damages to P500,000.00. Finding justification for exemplary
damages, the respondent court allowed an award of P50,000.00 for the same, in addition
to costs, attorney's fees and the other damages. The Court of Appeals, likewise, dismissed
the defendants' counterclaims.3

Consequently, both parties assail the respondent court's decision by filing two separate
petitions before this Court. Richard Li, in G.R. No. 117944, contends that he should not be
held liable for damages because the proximate cause of the accident was Ma. Lourdes
Valenzuela's own negligence. Alternatively, he argues that in the event that this Court
finds him negligent, such negligence ought to be mitigated by the contributory negligence
of Valenzuela.

On the other hand, in G.R. No. 115024, Ma. Lourdes Valenzuela assails the respondent
court's decision insofar as it absolves Alexander Commercial, Inc. from liability as the
owner of the car driven by Richard Li and insofar as it reduces the amount of the actual
and moral damages awarded by the trial court.4

As the issues are intimately related, both petitions are hereby consolidated.

It is plainly evident that the petition for review in G.R. No. 117944 raises no substantial
questions of law. What it, in effect, attempts to have this Court review are factual findings
of the trial court, as sustained by the Court of Appeals finding Richard Li grossly negligent
in driving the Mitsubishi Lancer provided by his company in the early morning hours of
June 24, 1990. This we will not do. As a general rule, findings of fact of the Court of
Appeals are binding and conclusive upon us, and this Court will not normally disturb
such factual findings unless the findings of fact of the said court are palpably unsupported
by the evidence on record or unless the judgment itself is based on a misapprehension of
facts.5

In the first place, Valenzuela's version of the incident was fully corroborated by an
uninterested witness, Rogelio Rodriguez, the owner-operator of an establishment located
just across the scene of the accident. On trial, he testified that he observed a car being
driven at a "very fast" speed, racing towards the general direction of Araneta
Avenue.6 Rodriguez further added that he was standing in front of his establishment, just
ten to twenty feet away from the scene of the accident, when he saw the car hit
Valenzuela, hurtling her against the windshield of the defendant's Mitsubishi Lancer, from
where she eventually fell under the defendant's car. Spontaneously reacting to the
incident, he crossed the street, noting that a man reeking with the smell of liquor had
alighted from the offending vehicle in order to survey the incident. 7 Equally important,
Rodriguez declared that he observed Valenzuela's car parked parallel and very near the
sidewalk,8 contrary to Li's allegation that Valenzuela's car was close to the center of the
right lane. We agree that as between Li's "self-serving" asseverations and the observations
of a witness who did not even know the accident victim personally and who immediately
gave a statement of the incident similar to his testimony to the investigator immediately
after the incident, the latter's testimony deserves greater weight. As the court emphasized:

The issue is one of credibility and from Our own examination of the transcript, We are not
prepared to set aside the trial court's reliance on the testimony of Rodriguez negating
defendant's assertion that he was driving at a safe speed. While Rodriguez drives only a
motorcycle, his perception of speed is not necessarily impaired. He was subjected to cross-
examination and no attempt was made to question .his competence or the accuracy of his
statement that defendant was driving "very fast". This was the same statement he gave to
the police investigator after the incident, as told to a newspaper report (Exh. "P"). We see
no compelling basis for disregarding his testimony.

The alleged inconsistencies in Rodriguez' testimony are not borne out by an examination of
the testimony. Rodriguez testified that the scene of the accident was across the street
where his beerhouse is located about ten to twenty feet away (pp. 35-36, tsn, June 17,
1991). He did not state that the accident transpired immediately in front of his
establishment. The ownership of the Lambingan se Kambingan is not material; the
business is registered in the name of his mother, but he explained that he owns the
establishment (p. 5, tsn, June 20, 1991). Moreover, the testimony that the streetlights on
his side of Aurora Boulevard were on the night the accident transpired (p. 8) is not
necessarily contradictory to the testimony of Pfc. Ramos that there was a streetlight at the
corner of Aurora Boulevard and F. Roman Street (p. 45, tsn, Oct. 20, 1991).

With respect to the weather condition, Rodriguez testified that there was only a drizzle, not
a heavy rain and the rain has stopped and he was outside his establishment at the time
the accident transpired (pp. 64-65, tsn, June 17, 1991). This was consistent with
plaintiff's testimony that it was no longer raining when she left Bistro La Conga (pp. 10-11,
tsn, April 29, 1991). It was defendant Li who stated that it was raining all the way in an
attempt to explain why he was travelling at only 50-55 kph. (p. 11, tsn, Oct. 14, 1991). As
to the testimony of Pfc. Ramos that it was raining, he arrived at the scene only in response
to a telephone call after the accident had transpired (pp. 9-10, tsn, Oct. 28, 1991). We find
no substantial inconsistencies in Rodriguez's testimony that would impair the essential
integrity of his testimony or reflect on his honesty. We are compelled to affirm the trial
court's acceptance of the testimony of said eyewitness.

Against the unassailable testimony of witness Rodriguez we note that Li's testimony was
peppered with so many inconsistencies leading us to conclude that his version of the
accident was merely adroitly crafted to provide a version, obviously self-serving, which
would exculpate him from any and all liability in the incident. Against Valenzuela's
corroborated claims, his allegations were neither backed up by other witnesses nor by the
circumstances proven in the course of trial. He claimed that he was driving merely at a
speed of 55 kph. when "out of nowhere he saw a dark maroon lancer right in front of him,
which was (the) plaintiff's car". He alleged that upon seeing this sudden "apparition" he
put on his brakes to no avail as the road was slippery. 9

One will have to suspend disbelief in order to give credence to Li's disingenuous and
patently self-serving asseverations. The average motorist alert to road conditions will have
no difficulty applying the brakes to a car traveling at the speed claimed by Li. Given a light
rainfall, the visibility of the street, and the road conditions on a principal metropolitan
thoroughfare like Aurora Boulevard, Li would have had ample time to react to the
changing conditions of the road if he were alert - as every driver should be - to those
conditions. Driving exacts a more than usual toll on the senses. Physiological "fight or
flight" 10 mechanisms are at work, provided such mechanisms were not dulled by drugs,
alcohol, exhaustion, drowsiness, etc.11 Li's failure to react in a manner which would have
avoided the accident could therefore have been only due to either or both of the two
factors: 1) that he was driving at a "very fast" speed as testified by Rodriguez; and 2) that
he was under the influence of alcohol. 12 Either factor working independently would have
diminished his responsiveness to road conditions, since normally he would have slowed
down prior to reaching Valenzuela's car, rather than be in a situation forcing him to
suddenly apply his brakes. As the trial court noted (quoted with approval by respondent
court):

Secondly, as narrated by defendant Richard Li to the San Juan Police immediately after
the incident, he said that while driving along Aurora Blvd., out of nowhere he saw a dark
maroon lancer right in front of him which was plaintiff's car, indicating, again, thereby
that, indeed, he was driving very fast, oblivious of his surroundings and the road ahead of
him, because if he was not, then he could not have missed noticing at a still far distance
the parked car of the plaintiff at the right side near the sidewalk which had its emergency
lights on, thereby avoiding forcefully bumping at the plaintiff who was then standing at the
left rear edge of her car.

Since, according to him, in his narration to the San Juan Police, he put on his brakes
when he saw the plaintiff's car in front of him, but that it failed as the road was wet and
slippery, this goes to show again, that, contrary to his claim, he was, indeed, running very
fast. For, were it otherwise, he could have easily completely stopped his car, thereby
avoiding the bumping of the plaintiff, notwithstanding that the road was wet and slippery.
Verily, since, if, indeed, he was running slow, as he claimed, at only about 55 kilometers
per hour, then, inspite of the wet and slippery road, he could have avoided hitting the
plaintiff by the mere expedient or applying his brakes at the proper time and distance.

It could not be true, therefore, as he now claims during his testimony, which is contrary to
what he told the police immediately after the accident and is, therefore, more believable,
that he did not actually step on his brakes but simply swerved a little to the right when he
saw the on-coming car with glaring headlights, from the opposite direction, in order to
avoid it.

For, had this been what he did, he would not have bumped the car of the plaintiff which
was properly parked at the right beside the sidewalk. And, it was not even necessary for
him to swerve a little to the right in order to safely avoid a collision with the on-coming
car, considering that Aurora Blvd. is a double lane avenue separated at the center by a
dotted white paint, and there is plenty of space for both cars, since her car was running at
the right lane going towards Manila on the on-coming car was also on its right lane going
to Cubao.13

Having come to the conclusion that Li was negligent in driving his company-issued
Mitsubishi Lancer, the next question for us to determine is whether or not Valenzuela was
likewise guilty of contributory negligence in parking her car alongside Aurora Boulevard,
which entire area Li points out, is a no parking zone.

We agree with the respondent court that Valenzuela was not guilty of contributory
negligence.

Contributory negligence is conduct on the part of the injured party, contributing as a legal
cause to the harm he has suffered, which falls below the standard to which he is required
to conform for his own protection.14 Based on the foregoing definition, the standard or act
to which, according to petitioner Li, Valenzuela ought to have conformed for her own
protection was not to park at all at any point of Aurora Boulevard, a no parking zone. We
cannot agree.

Courts have traditionally been compelled to recognize that an actor who is confronted with
an emergency is not to be held up to the standard of conduct normally applied to an
individual who is in no such situation. The law takes stock of impulses of humanity when
placed in threatening or dangerous situations and does not require the same standard of
thoughtful and reflective care from persons confronted by unusual and oftentimes
threatening conditions.15

Under the "emergency rule" adopted by this Court in Gan vs. Court of Appeals,16 an
individual who suddenly finds himself in a situation of danger and is required to act
without much time to consider the best means that may be adopted to avoid the
impending danger, is not guilty of negligence if he fails to undertake what subsequently
and upon reflection may appear to be a better solution, unless the emergency was brought
by his own negligence.17

Applying this principle to a case in which the victims in a vehicular accident swerved to
the wrong lane to avoid hitting two children suddenly darting into the street, we held,
in Mc Kee vs. Intermediate Appellate Court,18 that the driver therein, Jose Koh, "adopted the
best means possible in the given situation" to avoid hitting the children. Using the
"emergency rule" the Court concluded that Koh, in spite of the fact that he was in the
wrong lane when the collision with an oncoming truck occurred, was not guilty of
negligence.19

While the emergency rule applies to those cases in which reflective thought, or the
opportunity to adequately weigh a threatening situation is absent, the conduct which is
required of an individual in such cases is dictated not exclusively by the suddenness of the
event which absolutely negates thoroughful care, but by the over-all nature of the
circumstances. A woman driving a vehicle suddenly crippled by a flat tire on a rainy night
will not be faulted for stopping at a point which is both convenient for her to do so and
which is not a hazard to other motorists. She is not expected to run the entire boulevard in
search for a parking zone or turn on a dark street or alley where she would likely find no
one to help her. It would be hazardous for her not to stop and assess the emergency
(simply because the entire length of Aurora Boulevard is a no-parking zone) because the
hobbling vehicle would be both a threat to her safety and to other motorists. In the instant
case, Valenzuela, upon reaching that portion of Aurora Boulevard close to A. Lake St.,
noticed that she had a flat tire. To avoid putting herself and other motorists in danger, she
did what was best under the situation. As narrated by respondent court: "She stopped at a
lighted place where there were people, to verify whether she had a flat tire and to solicit
help if needed. Having been told by the people present that her rear right tire was flat and
that she cannot reach her home she parked along the sidewalk, about 1 1/2 feet away,
behind a Toyota Corona Car."20 In fact, respondent court noted, Pfc. Felix Ramos, the
investigator on the scene of the accident confirmed that Valenzuela's car was parked very
close to the sidewalk.21 The sketch which he prepared after the incident showed
Valenzuela's car partly straddling the sidewalk, clear and at a convenient distance from
motorists passing the right lane of Aurora Boulevard. This fact was itself corroborated by
the testimony of witness Rodriguez.22

Under the circumstances described, Valenzuela did exercise the standard reasonably
dictated by the emergency and could not be considered to have contributed to the
unfortunate circumstances which eventually led to the amputation of one of her lower
extremities. The emergency which led her to park her car on a sidewalk in Aurora
Boulevard was not of her own making, and it was evident that she had taken all
reasonable precautions.

Obviously in the case at bench, the only negligence ascribable was the negligence of Li on
the night of the accident. "Negligence, as it is commonly understood is conduct which
creates an undue risk of harm to others." 23 It is the failure to observe that degree of care,
precaution, and vigilance which the circumstances justly demand, whereby such other
person suffers injury.24 We stressed, in Corliss vs. Manila Railroad Company,25 that
negligence is the want of care required by the circumstances.

The circumstances established by the evidence adduced in the court below plainly
demonstrate that Li was grossly negligent in driving his Mitsubishi Lancer. It bears
emphasis that he was driving at a fast speed at about 2:00 A.M. after a heavy downpour
had settled into a drizzle rendering the street slippery. There is ample testimonial evidence
on record to show that he was under the influence of liquor. Under these conditions, his
chances of effectively dealing with changing conditions on the road were significantly
lessened. As Presser and Keaton emphasize:

[U]nder present day traffic conditions, any driver of an automobile must be prepared for
the sudden appearance of obstacles and persons on the highway, and of other vehicles at
intersections, such as one who sees a child on the curb may be required to anticipate its
sudden dash into the street, and his failure to act properly when they appear may be
found to amount to negligence.26

Li's obvious unpreparedness to cope with the situation confronting him on the night of the
accident was clearly of his own making.
We now come to the question of the liability of Alexander Commercial, Inc. Li's employer.
In denying liability on the part of Alexander Commercial, the respondent court held that:

There is no evidence, not even defendant Li's testimony, that the visit was in connection
with official matters. His functions as assistant manager sometimes required him to
perform work outside the office as he has to visit buyers and company clients, but he
admitted that on the night of the accident he came from BF Homes Paranaque he did not
have "business from the company" (pp. 25-26, ten, Sept. 23, 1991). The use of the
company car was partly required by the nature of his work, but the privilege of using it for
non-official business is a "benefit", apparently referring to the fringe benefits attaching to
his position.

Under the civil law, an employer is liable for the negligence of his employees in the
discharge of their respective duties, the basis of which liability is not respondeat superior,
but the relationship of pater familias, which theory bases the liability of the master
ultimately on his own negligence and not on that of his servant (Cuison v. Norton and
Harrison Co., 55 Phil. 18). Before an employer may be held liable for the negligence of his
employee, the act or omission which caused damage must have occurred while an
employee was in the actual performance of his assigned tasks or duties (Francis High
School vs. Court of Appeals, 194 SCRA 341). In defining an employer's liability for the acts
done within the scope of the employee's assigned tasks, the Supreme Court has held that
this includes any act done by an employee, in furtherance of the interests of the employer
or for the account of the employer at the time of the infliction of the injury or damage
(Filamer Christian Institute vs. Intermediate Appellate Court, 212 SCRA 637). An employer
is expected to impose upon its employees the necessary discipline called for in the
performance of any act "indispensable to the business and beneficial to their employer" (at
p. 645).

In light of the foregoing, We are unable to sustain the trial court's finding that since
defendant Li was authorized by the company to use the company car "either officially or
socially or even bring it home", he can be considered as using the company car in the
service of his employer or on the occasion of his functions. Driving the company car was
not among his functions as assistant manager; using it for non-official purposes would
appear to be a fringe benefit, one of the perks attached to his position. But to impose
liability upon the employer under Article 2180 of the Civil Code, earlier quoted, there must
be a showing that the damage was caused by their employees in the service of the
employer or on the occasion of their functions. There is no evidence that Richard Li was at
the time of the accident performing any act in furtherance of the company's business or its
interests, or at least for its benefit. The imposition of solidary liability against defendant
Alexander Commercial Corporation must therefore fail. 27

We agree with the respondent court that the relationship in question is not based on the
principle of respondeat superior, which holds the master liable for acts of the servant, but
that of pater familias, in which the liability ultimately falls upon the employer, for his
failure to exercise the diligence of a good father of the family in the selection and
supervision of his employees. It is up to this point, however, that our agreement with the
respondent court ends. Utilizing the bonus pater familias standard expressed in Article
2180 of the Civil Code, 28 we are of the opinion that Li's employer, Alexander Commercial,
Inc. is jointly and solidarily liable for the damage caused by the accident of June 24, 1990.

First, the case of St. Francis High School vs. Court of Appeals29 upon which respondent
court has placed undue reliance, dealt with the subject of a school and its teacher's
supervision of students during an extracurricular activity. These cases now fall under the
provision on special parental authority found in Art. 218 of the Family Code which
generally encompasses all authorized school activities, whether inside or outside school
premises.

Second, the employer's primary liability under the concept of pater familias embodied by
Art 2180 (in relation to Art. 2176) of the Civil Code is quasi-delictual or tortious in
character. His liability is relieved on a showing that he exercised the diligence of a good
father of the family in the selection and supervision of its employees. Once evidence is
introduced showing that the employer exercised the required amount of care in selecting
its employees, half of the employer's burden is overcome. The question of
diligent supervision, however, depends on the circumstances of employment.

Ordinarily, evidence demonstrating that the employer has exercised diligent supervision of
its employee during the performance of the latter's assigned tasks would be enough to
relieve him of the liability imposed by Article 2180 in relation to Article 2176 of the Civil
Code. The employer is not expected to exercise supervision over either the employee's
private activities or during the performance of tasks either unsanctioned by the former or
unrelated to the employee's tasks. The case at bench presents a situation of a different
character, involving a practice utilized by large companies with either their employees of
managerial rank or their representatives.

It is customary for large companies to provide certain classes of their employees with
courtesy vehicles. These company cars are either wholly owned and maintained by the
company itself or are subject to various plans through which employees eventually acquire
their vehicles after a given period of service, or after paying a token amount. Many
companies provide liberal "car plans" to enable their managerial or other employees of
rank to purchase cars, which, given the cost of vehicles these days, they would not
otherwise be able to purchase on their own.

Under the first example, the company actually owns and maintains the car up to the point
of turnover of ownership to the employee; in the second example, the car is really owned
and maintained by the employee himself. In furnishing vehicles to such employees, are
companies totally absolved of responsibility when an accident involving a company-issued
car occurs during private use after normal office hours?

Most pharmaceutical companies, for instance, which provide cars under the first plan,
require rigorous tests of road worthiness from their agents prior to turning over the car
(subject of company maintenance) to their representatives. In other words, like a good
father of a family, they entrust the company vehicle only after they are satisfied that the
employee to whom the car has been given full use of the said company car for company or
private purposes will not be a threat or menace to himself, the company or to others.
When a company gives full use and enjoyment of a company car to its employee, it in effect
guarantees that it is, like every good father, satisfied that its employee will use the
privilege reasonably and responsively.

In the ordinary course of business, not all company employees are given the privilege of
using a company-issued car. For large companies other than those cited in the example of
the preceding paragraph, the privilege serves important business purposes either related
to the image of success an entity intends to present to its clients and to the public in
general, or - for practical and utilitarian reasons - to enable its managerial and other
employees of rank or its sales agents to reach clients conveniently. In most cases,
providing a company car serves both purposes. Since important business transactions and
decisions may occur at all hours in all sorts of situations and under all kinds of guises,
the provision for the unlimited use of a company car therefore principally serves the
business and goodwill of a company and only incidentally the private purposes of the
individual who actually uses the car, the managerial employee or company sales agent. As
such, in providing for a company car for business use and/or for the purpose of furthering
the company's image, a company owes a responsibility to the public to see to it that the
managerial or other employees to whom it entrusts virtually unlimited use of a company
issued car are able to use the company issue capably and responsibly.

In the instant case, Li was an Assistant Manager of Alexander Commercial, Inc. In his
testimony before the trial court, he admitted that his functions as Assistant Manager did
not require him to scrupulously keep normal office hours as he was required quite often to
perform work outside the office, visiting prospective buyers and contacting and meeting
with company clients. 30 These meetings, clearly, were not strictly confined to routine
hours because, as a managerial employee tasked with the job of representing his company
with its clients, meetings with clients were both social as well as work-related functions.
The service car assigned to Li by Alexander Commercial, Inc. therefore enabled both Li - as
well as the corporation - to put up the front of a highly successful entity, increasing the
latter's goodwill before its clientele. It also facilitated meeting between Li and its clients by
providing the former with a convenient mode of travel.

Moreover, Li's claim that he happened to be on the road on the night of the accident
because he was coming from a social visit with an officemate in Paranaque was a bare
allegation which was never corroborated in the court below. It was obviously self-serving.
Assuming he really came from his officemate's place, the same could give rise to
speculation that he and his officemate had just been from a work-related function, or they
were together to discuss sales and other work related strategies.

In fine, Alexander Commercial, inc. has not demonstrated, to our satisfaction, that it
exercised the care and diligence of a good father of the family in entrusting its company
car to Li. No allegations were made as to whether or not the company took the steps
necessary to determine or ascertain the driving proficiency and history of Li, to whom it
gave full and unlimited use of a company car. 31 Not having been able to overcome the
burden of demonstrating that it should be absolved of liability for entrusting its company
car to Li, said company, based on the principle of bonus pater familias, ought to be jointly
and severally liable with the former for the injuries sustained by Ma. Lourdes Valenzuela
during the accident.

Finally, we find no reason to overturn the amount of damages awarded by the respondent
court, except as to the amount of moral damages. In the case of moral damages, while the
said damages are not intended to enrich the plaintiff at the expense of a defendant, the
award should nonetheless be commensurate to the suffering inflicted. In the instant case
we are of the opinion that the reduction in moral damages from an amount of
P1,000,000.00 to P800,000,00 by the Court of Appeals was not justified considering the
nature of the resulting damage and the predictable sequelae of the injury.

As a result of the accident, Ma. Lourdes Valenzuela underwent a traumatic amputation of

her left lower extremity at the distal left thigh just above the knee. Because of this,
Valenzuela will forever be deprived of the full ambulatory functions of her left extremity,
even with the use of state of the art prosthetic technology. Well beyond the period of
hospitalization (which was paid for by Li), she will be required to undergo adjustments in
her prosthetic devise due to the shrinkage of the stump from the process of healing.

These adjustments entail costs, prosthetic replacements and months of physical and
occupational rehabilitation and therapy. During her lifetime, the prosthetic devise will
have to be replaced and re-adjusted to changes in the size of her lower limb effected by the
biological changes of middle-age, menopause and aging. Assuming she reaches
menopause, for example, the prosthetic will have to be adjusted to respond to the changes
in bone resulting from a precipitate decrease in calcium levels observed in the bones of all
post-menopausal women. In other words, the damage done to her would not only be
permanent and lasting, it would also be permanently changing and adjusting to the
physiologic changes which her body would normally undergo through the years. The
replacements, changes, and adjustments will require corresponding adjustive physical and
occupational therapy. All of these adjustments, it has been documented, are painful.

The foregoing discussion does not even scratch the surface of the nature of the resulting
damage because it would be highly speculative to estimate the amount of psychological
pain, damage and injury which goes with the sudden severing of a vital portion of the
human body. A prosthetic device, however technologically advanced, will only allow a
reasonable amount of functional restoration of the motor functions of the lower limb. The
sensory functions are forever lost. The resultant anxiety, sleeplessness, psychological
injury, mental and physical pain are inestimable.

As the amount of moral damages are subject to this Court's discretion, we are of the
opinion that the amount of P1,000,000.00 granted by the trial court is in greater accord
with the extent and nature of the injury - physical and psychological - suffered by
Valenzuela as a result of Li's grossly negligent driving of his Mitsubishi Lancer in the early
morning hours of the accident.

WHEREFORE, PREMISES CONSIDERED, the decision of the Court of Appeals is modified

with the effect of REINSTATING the judgment of the Regional Trial Court.

SO ORDERED.

RONGAVILLA VS CA

QUISUMBING, J.:

For review on appeal by certiorari are the Decision[1] of the Court of Appeals in CA-G.R. CV
No. 06543, promulgated on March 11, 1988, and the Resolution [2] dated June 28, 1988,
denying petitioner's motion for reconsideration.

The appealed decision affirmed in toto the judgment of the Regional Trial Court of Pasay
City in Civil Case No. LP-8790-P, which disposed of the controversy as follows:

"WHEREFORE, judgment is hereby rendered declaring void and inexistent the Deed of
Absolute Sale (Exh. "I") dated June 3, 1976 allegedly executed by plaintiffs in favor of
defendant spouses, which document is now particulary identified as Doc, No. 164; Page
no. 34; Book No. I; Series of 1976 in the Notarial Register of Arcadio Espiritu, a Notary
Public for and in Province of Cavite. Further, defendant spouses are hereby ordered -
a. To reconvey to the plaintiffs, free from all liens and encumbrances, the property covered
by Transfer Certificate of Title No. S-28903 of the Registry of Deeds for the Province of
Rizal;

b. . To pay to plaintiffs the sum of P5,000.00 as attorney's fees; and

c. To pay the cost of the suit."[3]

As gleaned from the record, the private parties are closely related. Plaintiffs below, now the
private respondents, are the aunts of herein petitioner Dolores Rongavilla. Both spinsters,
they earn their livelihood as embroiderers ("magbuburda") and dressmakers; although
unschooled in English, they are however able to read and write in Tagalog. Since they are
of advanced age (Mercedes de la Cruz, 60 and Florencia de la Cruz, 71), their day to day
activities were confined mostly close to home.

The property subject of this controversy between kith and kin is a parcel of land, located in
Manuyo, Las Pias, Rizal (now Metro Manila) owned by private respondents, in the
proportion of one-half (1/2) pro-indiviso, with another niece named Juanita Jimenez as co-
owner of the other one-half. The whole parcel consisted of 131 square meters and was
covered by Original Certificate of Title (OCT) No. 5415 of the Register of Deeds of the
Province of Rizal. This OCT, as well as the Transfer Certificate of Title (TCT) No. S-28903
after the parcel was subdivided, was kept in the possession of Juanita Jimenez, who is the
elder sister of Dolores Rongavilla.

Although the basic fact situation here might appear all too familiar, the legal controversy
itself is notable for having passed through the entire channel of the justice system. [4] The
present petition before us was given due course per Resolution [5] dated June 26, 1989; but
it was denied on September 20, 1989, for non-compliance with certain requirements;
[6]
although, upon motion for reconsideration by the petitioners showing compliance, it was
reinstated[7] on September 2, 1991.

Considering the circumstances in this case, including the relationship of the parties, it
behooves this Court now to examine closely and carefully the questioned judgment and
the record below. For the Court could not but be mindful of the codal admonition that:

"In all contractual, property or other relations, when one of the parties is at a disadvantage
on account of his moral dependence, ignorance, indigence, mental weakness, tender age,
or other handicap, the courts must vigilant for his protection." (Art. 24, Civil Code)

From the facts found below, it appears that in the month of May, 1976, the private
respondents borrowed the amount of two thousand (P2,000) from the petitioners for the
purpose of having their (respondents') dilapidated rooftop repaired.

A month later, petitioner Dolores Rongavilla and her sister Juanita Jimenez visited their
aunt's home, bringing with them a document for the signature of their aunts. The
document is admittedly typewritten in English. When asked in Tagalog by one of the
aunts, respondent Mercedes de la Cruz, what the paper was all about, Dolores Rongavilla
answered also in Tagalog, that it was just a document to show that the private
respondents had a debt amounting to P2,000. On account of that representation, private
respondent signed the document.

In September 1980, or after a lapse of over four years, petitioner Dolores Rongavilla went
to private respondents' place and asked them to vacate the parcel in question, claiming
that she and her husband were already the new owners of the land.

Surprised by petitioners' moves, private respondents with the help of friends went to the
Office of the Register of Deeds of the Province of Rizal to verify the matter. They discovered
that their Certificate of Title had been cancelled and a new one, Transfer Certificate of Title
No. S-28903, had been issued in favor of petitioners. They further discovered that said
parcel of land had been mortgaged with the Cavite Development Bank by the petitioners. It
was only then that the private respondents realized that the document they had previously
been asked by their nieces to sign was a deed of sale.

On February 3, 1981, private respondents filed with the Court of First Instance, now
Regional Trial Court, of Pasay City the sworn complaint [8] to have the purported deed of
sale declared void and inexistent, for being fictitious and simulated, and secured by means
of fraud and misrepresentation. They alleged that they did not sell their property in
question to the defendants; that they did not receive any consideration on the supposed
sale; that their Original Certificate of Title was cancelled and TCT No. S-28903 was issued
in favor of defendants (herein petitioners), who thereafter mortgaged said title for a total
of P40,000.00 to the damage and prejudice of the plaintiffs. They also claimed moral and
exemplary damages, as the court might determine.

Petitioners duly filed their answer [9] after the denial of their motion to dismiss, alleging that
plaintiffs (now the private respondents) sold their parcel of land voluntarily, that there was
consent to the deed of sale, that there was sufficient consideration therefor and that the
document on the sale was complete in itself and in due form, enabling the Register of
deeds to cancel their old TCT and issue a new one. Petitioners further stated that private
respondent were fully appraised by the Notary Public, Atty. Arcadio G. Espiritu, on what
the document was all about, and having understood the explanation made by said Notary
Public, they voluntarily affixed their signatures on said document. Petitioners also
asserted as affirmative and/or special defenses that prescription had set in and that
private respondents no longer had a cause of action, and that the deed of sale contained
all the pre-requisites of a contract, namely consent of the parties, consideration or a price
certain, and determinate thing or object; and could no longer be annulled. They also
claimed moral and exemplary damages.

The trial court's judgment, quoted at the outset, being adverse to the petitioners, they
seasonably appealed. And after their rebuff at the appellate level, they come now to this
Court on certiorari under Rule 45 of the Rules of Court, citing the following grounds for
their petition:

"(1) It is clear and patent error of the Court of Appeals to declare as 'void and inexistent
the Deed of Absolute Sale (Exhibit 1) dated June 3, 1976.

(2) The Court of Appeals committed grave error of law in holding that the action to declare
nullity of the Deed of Absolute Sale (Exhibit 1) does not prescribe.

(3) The Court of Appeals committed grave abuse of discretion in relying on a purported
Certificate of Bureau of Internal Revenue which was not offered in evidence.

(4) The Court of Appeals committed grave error of law and abuse of discretion and grave
abuse of discretion amounting to lack or excess of jurisdiction in ordering the petitioners
to reconvey the subject parcel of land to the private respondents." [10]

With a slight variation but consistent with the grounds they have relied on petitioners
raise in their Memorandum[11] the following:

"ISSUES

1. Did the Court of Appeals commit a clear and patent error in declaring as 'void and
inexistent' the Deed of Absolute Sale (Exhibit 1) dated June 3, 1976?

2. Did the Court of Appeals commit grave error in holding that the action to annul the
Deed of Sale (Exhibit 1) does not prescribe?

3. Did the Court of Appeals commit grave abuse of discretion in relying on a purported
Certificate of the Bureau of Internal Revenue which was not offered in evidence?

4. Did the Court of Appeals commit grave error of law and grave abuse of discretion
amounting to lack of jurisdiction or in excess of jurisdiction in ordering petitioners to
reconvey the subject parcel of land to the private respondents?"

These issues may be synthesized into one: Did the respondent Court of Appeals commit
reversible error when it upheld the trial court's judgment that the disputed Deed of Sale
(Exhibit "1") is void and inexistent?

To resolve this pivotal issue, it must be noted that private respondents, as plaintiffs below,
based their complaint to declare the disputed deed void and inexistent on two fundamental
grounds: (1) lack of consent and (2) want of consideration. Under oath, they strongly
denied selling or even just agreeing to sell, their parcel of land to their niece and nephew-
in-law. During the hearing, they also denied going to and appearing before the Notary
Public who prepared the deed of sale. They also vehemently denied receiving any
consideration for the alleged sale. They added that their signatures on the purported deed
of sale were obtained by fraud and misrepresentation as petitioners had misled them to
believe the document was just a paper to evidence a debt of P2,000 they obtained to buy
G.I sheets for the repair of their leaking roof. [12] Private respondents were shocked and got
sick when they were told by petitioners that they (respondents) were no longer the owners
of the land.[13]

On these two points of consent and consideration, the trial court found that:
"x x x. A careful analysis and meticulous evaluation of the evidence on record has
convinced the Court that the sale of their property to the defendants was farthest from the
plaintiffs' minds. The Court believes that when plaintiffs voluntarily signed the
document which turned out to be a deed of sale, they were misled by defendant Dolores
Rongavilla and her sister Juanita Jimenez into believing that what they signed was a
document acknowledging the loan of P2,000.00 extended them by said defendant.

"The Deed of Absolute Sale (Exh. "l") mentions a consideration of P2,000.00. Three years
after the alleged sale, the same property was mortgaged by defendant spouses with the
Cavite Development Bank for P40,000.00. Clearly enough, the gross inadequacy and
unconsciounableness [sic] of the consideration deters the Court from subscribing to
defendants' theory that plaintiffs sold the property to them. It is more reasonable to
assume that the amount of P2,000.00 mentioned in the deed refers to the loan defendants
extended to plaintiffs for the same amount.

"Plaintiffs are now of advanced age. Their only property is the lot in question and the
house erected thereon. x x x.

"As there is no indication that plaintiffs were in dire need of money, except for few [sic]
amount, except for few [sic] amount necessary for the repair of the roof of their house for
which they obtained a loan of P2,000.00 from defendants, there was no reason for
plaintiffs to dispose of their property. To do so would be inconsistent with the regular
norm of human conduct and the natural course of events. It is not in accord with the
natural promptings and instincts of human nature."[14]

To these findings by thetrial court, the Court of Appelas in its own decision asserted. In
addition, it laid stress on the point of lack of consideration by quoting agreeably the trial
judge's holding thereon:

"By more than mere preponderance of evidence of evidence plaintiffs [herein

private respondents] have established the merit of their cause of action. The Court is of the
opinion and so holds that there was fraud exercised by defendant Dolores Rongavilla and
her sister Juanita Jimenez in securing the signature of the Deed of Absolute Sale (Exh. 'l')
and there was no consideration whatsoever dor the alleged sale. Undoubtedly, the said
deed of sale is simulated, fictitious and void."[15]

And before concluding, the appellate court reiterated the proper characterization of the
deed of sale in question, not as an annullable contract, but as a void and inexistent
contract as found by the trial court:

"x x x. In the case at bar, however, We are dealing not merely with a voidable contract
which is tainted with fraud, mistake, undue influence, violence or intimidation which may
justify the annulment of a contract, but with a contract that is null and void ab initio.

"In the present case, plaintiffs-appellees declared under oath in their complaint that they
signed the alleged document without knowing that said document was a deed of absolute
sale. This means that plaintiffs-appelles consent was not only vitiated, but that plaintiffs-
appealles have not give their consent at all. And since there was no consent, the deed of
absolute sale is, therefore, null and void ab initio. xxx'"[16]

Dissatisfied, petitioners now seek from this Court the reversal of the judgment below. They
insist in their petition before us that the deed is valid; and that because of the statute of
limitations, after the lapse of four years from its execution and registration, it could no
longer be annulled.

They assert that "the presumption that contracts are presumed to be valid and to be
supported by lawful and good consideration of one dollar is just as effectual and valuable
as a larger sum stipulated or paid''.[17]

They further assert that since private respondents signed the Deed of Sale, as a public
instrument, the truth of the recitals therein embodied could only be impugned and
disproved, not by mere preponderance of evidence, but by evidence of the "the clearest and
most satisfactory character, convincing and overwhelming.'" [18] Petitioners further state
that since they have been the ones paying real estate taxes on the property, rather than
their aunts, the latter by their acts had confirmed the deed executed by them. [19]

Despite the petitioners' insistence that the deed of sale is presumed valid and, being
registered, could not be disturbed anymore, we however find their arguments and
ratiocination less than persuasive. While petitioners would not want the deed of sale to be
impugned, they themselves contradict the recitals therein. On the vital point
of consideration, they and their witnesses, namely Juanita Jimenez and Atty. Arcadio
Espiritu repeatedly declared that the true consideration paid for the sale of the land was
not P2,000 as stated in their own Exhibit "l", the Deed of Sale, but in fact P7,800.00.[20]

Petitioner Dolores Rongavilla herself on cross-examination testified as follows:

"Atty. Rodriguez:

Q. You stated that you were present when this was explained by the notary public, how did
the notary public explain this deed of sale in English or Tagalog?

A. It was explained by the notary public that the property is being sold by them to us and
that the consideration was only P2,000.00 as appearing in the document in order that we
may be able to save for the payment of taxes and documentary stamps.

Q. Did the plaintiffs not say anything when the notary public according to you explained that
instead of P7,800.00, P2,000.00 will be stated in the document?

A. They did not say anything because we gave to them the amount of the consideration
agreed between us the sum of P7,800.00. (t.s.n., Sept. 2, 1982, pp. 9-10)"[21]

By their own testimony, the petitioners are pictured as not exactly averse to bending the
truth, particularly the purported consideration. Sadly, the irony of it is that while they
claimed they were regulary paying taxes on the land in question they had no second
thoughts stating at the trial and later on appeal that they had resorted to doctoring the
price stated in the disputed Deed of Sale, allegedly "to save on taxes". That admission
surely opens the door to questions on the integrity, genuineness and veracity of said
public instrument.

Thus, the trial court could not be said to err in asserting that "while it is true that public
documents are presumed genuine and regular under the provisions of the Rules of Court,
this presumption is a rebuttable presumption which may be overcome by clear, strong and
convincing evidence."[22]

Moreover, Exhibit "l", the deed itself, shows that contrary to the testimony of the notary
public, who appeared as a witness for petitioners, what was originally typed therein was
the amount of "Three Thousand Pesos (P3,000)", which later on was substituted by the
handwritten amount now of Two Thousand Pesos (P2,000)." [23] There is no need to
speculate on the motivation for this alteration. The notary public might have just wanted
to further save on taxes, rather than short-change the coffers of the government. But,
again, the whole fabric of petitioners' claim to the sanctity of the deed as public
instrument had thereby been shredded.

If as petitioners claimed on trial, the price paid was P7,800 while their deed showed
only P2,000, after the amount of P3,000 in the deed was altered, one may well inquire:
which figure could this Court believe? Could one say that the trial and the appellate courts
both erred in holding that no consideration passed from the buyer to the seller?

But petitioners herein would further take to task the appellate court for grave abuse of
discretion, as well as for a reversible error, in having relied on the "purported Certification
of the Bureau of Internal Revenue which was not offered in evidence". Since this is a
petition under Rule 45, however, we will not dwell on the alleged grave abuse of discretion
but limit our observation to the alleged error of law. The BIR certificate was the subject of
the testimony of witnesses at the hearing where both parties took full advantage of the
opportunity for direct and cross-examination as well as rebuttal and sur-rebuttal. [24] On
the witness stand, private respondents as plaintiffs below denied that they had any tax
account number nor even residence certificates. They were supported by their witnesses,
testifying also under oath. They contradicted the claim of the petitioners' lawyer-notary
public, that the disputed deed of sale was complete and in due form and was signed in his
presence by the private respondents. They further denied even having gone to the office of
the lawyer-notary public in Bacoor, Cavite, on June 3, 1976, the date of execution shown
in the deed, or on any other date. While indeed the BIR certificate was not formally offered
in evidence, hence no longer available on review, the record would show that said BIR
certificate was presented during the testimony on rebuttal of respondent Mercedes de la
Cruz:[25]

"ATTY. RODRIGUEZ:

According to the defendants, there was the alleged deed of sale executed by you and your
sister in favor of the defendants before Notary Public Arcadio G. Espiritu. It appears you
have presented Tax Account No. (TAN) 2345-463-6 and your sister Florencia de la Cruz also
presented Tax Account No. (TAN) 2345-468-4. Now, do you have any tax account number?

WITNESS:

None, sir.[26]

xxx

ATTY. RODRIGUEZ:

I am showing to you this certification from the "Kawanihan ng Rentas, Quezon City , dated
June 16, 1982, addressed to Miss Florencia de la Cruz and Miss Mercedes de la Cruz, Las
Pias, Metro-Manila, issued by the accounting chief, stating that in reply to you[r] request
dated June 14, 1982, requesting certification of your TAN, the records of their office do not
show that you were issued any tax account number, what relation has this document which
for purposes of identification, we respectfully request that the same be marked Exhibit "C" to
the certification issued by the BIR?

WITNESS:

"Yes, this is the one."[27]

Now even if the matter of the official certification by the BIR is set aside, the whole
question of the TAN being fake or belonging to somebody else, would boil down to one of
credibility between the two camps. Unfortunately for the petitioners herein, the trial court
found them and their witnesses far from credible. As remarked by the trial Judge, "the
declarations of defendants [herein petitioners] do not inspire rational belief." [28] It would
thus appear that the trial court and the appellate court committed no grave error of law,
that would impel us on this point to override their judgment.

Neither can we give assent to the assertion of petitioners that the appealed Court of
Appeals (CA) decision here as well as the judgment below is "contrary to settled
jurisprudence". This Court in Rivero v. Court of Appeals, 80 SCRA 411 (1977) had
occasion already to affirm a trial court's judgment declaring null and void the questioned
deed of sale where it found:

"The undisputed facts of record support the finding of the trial court that the consent of
Ana Concepcion to the deed of sale was obtained through fraudulent misrepresentation of
[her nephew] Jaime Rivero that the contract she was signing was one of mortgage."

"The land in question is located in the municipality of Polo, Bulacan, very near Manila. It
has an area of 2 hectares, 32 ares and 45 centares. The consideration for the sale of said
land is only P5,000.00 which is not only grossly inadequate but shocking to the
conscience x x x"[29]

In Ocejo, Perez & Co. vs. Flores, 40 Phil. 921 (1920), regarding the sale of land in Tayabas,
Quezon, the Court confronted a similar question:

"The first question presented is whether the contract of sale executed by Isabel Flores in
favor of Joaquin Bas is valid or not.

"By relying upon the documents executed in his favor by Isabel Flores evidencing the
contract of sale, Joaquin Bas insists that there has been a perfect and valid contract of
sale of real estate between them and that he paid to her the consideration of P20,000
mentioned in said documents. x x x.

"Isabel Flores, on the other hand, maintained that there was neither a real sale nor did she
receive a centavo from the defendant, as the price of said sale, x x x." [30]

Concluded the Court, after reviewing the series of transactions on record:

"It is then evident that the contract of sale mentioned in the notarial document of May 7,
1915, lacks cause or consideration and is therefore null and void and without any effect
whatsoever according to Article 1275 of the Civil Code, for it has been satisfactorily and
conclusively proven that the purchaser Joaquin Bas has not paid Isabel Flores for the
price of the lands that the latter has sold to him, and after being contented with having for
a long time given several promises showing that he had no intention to comply with his
contract, he concluded by executing four promissory notes payable to the vendor, which
recite the aforementioned purchase price and which were not also paid, there appearing in
the record facts from which it can be inferred that fraud has been committed." [31]

This Court in Mapalo v. Mapalo, 17 SCRA 114 (1966) stated:

"The rule under the Civil Code, again be it the old or the new, is that contracts without a
cause or consideration produce no effect whatsoever." [32]

The "problem" before the Court "is whether a deed which states a consideration that in fact
did not exist, is a contract, without consideration, and therefore void ab initio, or a
contract with a false consideration, and therefore, at least under the Old Civil Code,
voidable." This problem arose, as observed by the Court, because the questioned "deed of
sale" between the brothers Magpalo, in 1936, stated that it had for its consideration Five
Hundred (P500.00) Pesos. In fact, however, said "consideration was totally absent."[33]

Thus, the Court concluded:

"In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40 Phil.
921 is squarely applicable herein. In that case we ruled that a contract of purchase and
sale is null and null and void and produces no effect whatsoever where the same
is without cause or consideration in that the purchase price which appears thereon as
paid has in fact never been paid by the puchaser to vendor." [34]

Turning now to the issue of prescription, it follows that once the disputed deed is found to
be inexistent and void, the statute of limitations cannot apply. As the courts below ruled,
the cause of action for its declaration as such is imprescriptible. [35] Petitioners-spouses
contend, however, that this is contrary to settled jurisprudence because the applicable
precedent should be Pangadil v. CFI of Cotabato, 116 SCRA 347 (1982). But the fact
situation of that case differs radically from the present controversy. There the Court
upheld the dismissal of the action to declare a document known as "Ratificacion de Una
Venta" as inexistent and void after finding that it was "not a contract wherein the parties
do not intend to be bound at all;" that no circumstance was alleged to sustain the
contention "that the execution of the aforesaid document is contrary to public
policy;"[36] and that for 27 years the petitioners did not even care to verify the status of the
land in question. "Their inaction for such a considerable period of time reflects on the
credibility of their pretense that they merely intended to confirm an oral mortgage, instead
of sale of the land in question."[37]

Here in the present case, there is no doubt about the credibility of plaintiffs below (herein
private respondents) in pursuing their cause promptly and forcefully. They never intended
to sell, nor acceded to be bound by the sale of their land. Public policy is also well served
in defending the rights of the aged to legal protection, including their right to property that
is their home, as against fraud, misrepresentation, chicanery and abuse of trust and
confidence by those who owed them candor and respect.

More to the point, in our view, is Baranda v. Baranda, 150 SCRA 59 (1987), where this
Court found that:

"This Civil Code provides in Article 1391 that an action to annul a contract on the ground
of vitiated consent must be filed within four years from the discovery of the vice of consent.
In the instant case, however, we are dealing not with a voidable contract tainted with
fraud, mistake, undue influence, violence or intimidation that can justify its nullification,
but with a contract that is null and void ab initio

"Paulina Baranda declared under oath in her complaint that she signed the deeds of sale
without knowing what they were, which means that her consent was not merely marred by
the above-stated vices, so as to make the contracts voidable, but that she had not given
her consent at all. We are also satisfied that there was no valid consideration either for the
alleged transfers, for reasons already discussed. Lack of consent and consideration made
the deeds of sale void altogether [38]and rendered them subject to attack at any time,
conformably to the rule in Article 1410 that an action to declare the inexistence of void
contracts 'does not prescribe'."[39]

And if the passage of time could not cure the fatal flaw in the inexistent and void contract,
neither could an alleged ratification or confirmation thereof. Further, as in the case before
us, reconveyance is proper. "The defect of inexistence of a contract is permanent and
incurable, hence it cannot be cured either by ratification or by prescription. x x x There is
no need of an action to set aside a void or inexistent contract; in fact such action cannot
logically exist. However, an action to declare the non-existence of the contract can be
maintained; and in the same action, the plaintiff may recover what he has given by virtue
of the contract."[40]

Given the circumstances of the case and there being no reversible error in the challenged
decision, we are in accord with the judgment below and find the petitioners' appeal
without merit. For as well said in the Court of Appeals' Decision and Resolution under
review, "We cannot contemplate of the rather absurd situation, which defendants-
appellants would ineluctably lead [u]s to, where plaintiffs-appellees would sell their only
house, in which they have lived for so many years, in order to secure the measly sum
of P2,000.00 to repair the roof of their only house, which would all be lost to them anyway
upon the consummation of the sale. They would then become homeless, and the repaired
roof would be of no use to them."[41] Experience which is the life of the law -- as well as
logic and common sense -- militates against the petitioners' cause.

WHEREFORE, the instant petition is hereby DENIED. The Decision and the Resolution of
the Court of Appeals in CA-G.R. CV No. 06543 are hereby AFFIRMED.

Cost against petitioners.

SO ORDERED

CAYABYAB VS CA

PURISIMA, J.:

At bar is a Petition for Review on Certiorari assailing the decision of the Court of Appeals in
CA G.R. CV No. 26051 affirming the decision of the trial court in the case, entitled "Serafin
Modina vs. Ernesto Hontarciego, Paulino Figueroa and Ramon Chiang vs. Merlinda Plana
Chiang, intervenors", which declared as void and inexistent the deed of definite sale dated
December 17, 1975 as well as the Certificates of Title Nos. T-86912, T-86913, T-86914 in
the name of Ramon Chiang.1wphi1.nt

The facts that matter are as follows:

The parcels of land in question are those under the name of Ramon Chiang (hereinafter
referred to as CHIANG) covered by TCT Nos. T-86912, T-86913, and T-86914. He theorized
that subject properties were sold to him by his wife, Merlinda Plana Chiang (hereinafter
referred to as MERLINDA), as evidenced by a Deed of Absolute Sale dated December 17,
1975, 1 and were subsequently sold by CHIANG to the petitioner Serafin Modina
(MODINA), as shown by the Deeds of Sale, dated August 3, 1979 and August 24, 1979,
respectively.

MODINA brought a Complaint for Recovery of Possession with Damages against the
private respondents, Ernesto Hontarciego, Paul Figueroa and Teodoro Hipalla, docketed as
Civil Case No. 13935 before the Regional Trial Court of Iloilo City.

Upon learning the institution of the said case, MERLINDA presented a Complaint-in-
intervention, seeking the declaration of nullity of the Deed of Sale between her husband
and MODINA on the ground that the titles of the parcels of land in dispute were never
legally transferred to her husband. Fraudulent acts were allegedly employed by him to
obtain a Torrens Title in his favor. However, she confirmed the validity of the lease
contracts with the other private respondents.

MERLINDA also admitted that the said parcels of land were those ordered sold by Branch
2 of the then Court of First Instance of Iloilo in Special Proceeding No. 2469 in "Intestate
Estate of Nelson Plana" where she was appointed as the administratix, being the widow of
the deceased, her first husband. An Authority to Sell was issued by the said Probate Court
for the sale of the same properties. 2

After due hearing, the Trial Court decided in favor of MERLINDA, disposing thus:

WHEREFORE, judgment is hereby rendered (1) declaring as void and inexistent the sale of
Lots 10063, 10088, 10085 and 10089 of the Cadastral Survey of Sta. Barbara by Merlinda
Plana in favor of Ramon Chiang as evidenced by the deed of definite sale dated December
17, 1975 (Exhibits "H"; "3"-Chiang; "9" Intervenor) as well as the Certificates of Title Nos.
T-86912, T-86913, T-86914 and T-86915 in the name of Ramon Chiang; (2) declaring as
void and inexistent the sale of the same properties by Ramon Chiang in favor of Serafin
Modina as evidenced by the deeds of sale (Exhibits "A", "B", "6" Chiang and "7"
Chiang) dated August 3, and 24, 1979, as well as Certificates of Title Nos. T-102631,
102630, 102632 and 102890 in the name of Serafin Modina; (3) ordering the Register of
Deeds of Iloilo to cancel said certificates of title in the names of Ramon Chiang and Serafin
Modina and to reinstate the Certificates of Title Nos. T-57960, T-57962, T-57963 and T-
57864 in the name of Nelson Plana; (4) ordering Serafin Modina to vacate and restore
possession of the lots in question to Merlinda Plana Chiang; (5) ordering Ramon Chiang to
restitute and pay to Serafin Modina the sum of P145,800.00 and; (6) ordering Serafin
Modina to pay Ernesto Hontarciego the sum of P44,500.00 as actual and compensatory
damages plus the sum of P5,000.00, for and as attorney's fees, with costs in favor of said
defendants against the plaintiff.

On appeal; the Court of Appeals affirmed the aforesaid decision in toto.

Dissatisfied therewith, petitioner found his way to this Court via the present Petition for
Review under the Rule 45 seeking to set aside the assailed decision of the Court of
Appeals.

Raised for resolution here are: (1) whether the sale of subject lots should be nullified, (2)
whether petitioner was not a purchaser in good faith, (3) whether the decision of the trial
court was tainted with excess of jurisdiction; and (4) whether or not only three-fourths of
subject lots should be returned to the private respondent.

Anent the first issue, petitioner theorizes that the sale in question is null and void for
being violative of Article 1490 3 of the New Civil Code prohibiting sales between spouses.
Consequently, what is applicable is Article 1412 4 supraon the principle of in pari delicto,
which leaves both guilty parties where they are, and keeps undisturbed the rights of third
persons to whom the lots involved were sold; petitioner stressed.1wphi1.nt

Petitioner anchors his submission on the following statements of the Trial Court which the
Court of Appeals upheld, to wit:

Furthermore, under Art. 1490, husband and wife are prohibited to sell properties to each
other. And where, as in this case, the sale is inexistent for lack of consideration, the
principle of in pari delicto non oritur actio does not apply. (Vasquez vs. Porta, 98 Phil 490),
(Emphasis ours) Thus, Art. 1490 provides:

Art. 1490. The husband and the wife cannot sell property to each other, except:

(1) when a separation of propety was agreed upon in the marriage settlements; or

(2) when there has been a judicial separation of property under Art. 191.

The exception to the rule laid down in Art. 1490 of the New Civil Code not having existed
with respect to the property relations of Ramon Chiang and Merlinda Plana Chiang, the
sale by the latter in favor of the former of the properties in question is invalid for being
prohibited by law. Not being the owner of subject properties, Ramon Chiang could not
have validly sold the same to plaintiff Serafin Modina. The sale by Ramon Chiang in favor
of Serafin Modina is, likewise, void and inexistent.

xxx xxx xxx

The Court of Appeals, on the other hand, adopted the following findings a quo: that there
is no sufficient evidence establishing fault on the part of MERLINDA, and therefore, the
principle of in pari delicto is inapplicable and the sale was void for want of consideration.
In effect, MERLINDA can recover the lots sold by her husband to petitioner MODINA.
However, the Court of Appeals ruled that the sale was void for violating Article 1490 of the
Civil Code, which prohibits sales between spouses.

The principle of in pari delicto non oritur actio 6 denies all recovery to the guilty parties inter
se. It applies to cases where the nullity arises from the illegality of the consideration or the
purpose of the contract. 7 When two persons are equally at fault, the law does not relieve
them. The exception to this general rule is when the principle is invoked with respect to
inexistent contracts. 8

In the petition under consideration, the Trial Court found that subject Deed of Sale was a
nullity for lack of any consideration. 9 This finding duly supported by evidence was
affirmed by the Court of Appeals. Well-settled is the rule that this Court will not disturb
such finding absent any evidence to the contrary. 10

Under Article 1409 11 of the New Civil Code, enumerating void contracts, a contract
without consideration is one such void contract. One of the characteristics of a void or
inexistent contract is that it produces no effect. So also, inexistent contracts can be
invoked by any person whenever juridical effects founded thereon are asserted against
him. A transferor can recover the object of such contract by accion reivindicatoria and any
possessor may refuse to deliver it to the transferee, who cannot enforce the transfer. 12

Thus, petitioner's insistence that MERLINDA cannot attack subject contract of sale as she
was a guilty party thereto is equally unavailing.
But the pivot of inquiry here is whether MERLINDA is barred by the principle of in pari
delicto from questioning subject Deed of Sale.

It bears emphasizing that as the contracts under controversy are inexistent contracts
within legal contemplation. Articles 1411 and 1412 of the New Civil Code are
inapplicable. In pari delicto doctrine applies only to contracts with illegal consideration or
subject matter, whether the attendant facts constitute an offense or misdemeanor or
whether the consideration involved is merely rendered illegal. 13

The statement below that it is likewise null and void for being violative of Article 1490
should just be treated as a surplusage or an obiter dictum on the part of the Trial Court as
the issue of whether the parcels of land in dispute are conjugal in nature or they fall under
the exceptions provided for by law, was neither raised nor litigated upon before the lower
Court. Whether the said lots were ganancial properties was never brought to the fore by
the parties and it is too late to do so now.

Furthermore, if this line of argument be followed, the Trial Court could not have declared
subject contract as null and void because only the heirs and the creditors can question its
nullity and not the spouses themselves who executed the contract with full knowledge of
the prohibition. 14

Records show that in the complaint-in-intervention of MERLINDA, she did not aver the
same as a ground to nullify subject Deed of Sale. In fact, she denied the existence of the
Deed of Sale in favor of her husband. In the said Complaint, her allegations referred to the
want of consideration of such Deed of Sale. She did not put up the defense under Article
1490, to nullify her sale to her husband CHIANG because such a defense would be
inconsistent with her claim that the same sale was inexistent.1wphi1.nt

The Trial Court debunked petitioner's theory that MERLINDA intentionally gave away the
bulk of her and her late husband's estate to defendant CHIANG as his exclusive property,
for want of evidentiary anchor. They insist on the Deed of Sale wherein MERLINIDA made
the misrepresentation that she was a widow and CHIANG was single, when at the time of
execution thereof, they were in fact already married. Petitioner insists that this document
conclusively established bad faith on the part of MERLINDA and therefore, the principle
of in pari delicto should have been applied.

These issues are factual in nature and it is not for this Court to appreciate and evaluate
the pieces of evidence introduced below. An appellate court defers to the factual findings of
the Trial Court, unless petitioner can show a glaring mistake in the appreciation of
relevant evidence.

Since one of the characteristics of a void or inexistent contract is that it does not produce
any effect, MERLINDA can recover the property from petitioner who never acquired title
thereover.

As to the second issue, petitioner stresses that his title should have been respected since
he is a purchaser in good faith and for value. The Court of Appeals, however, opined that
he (petitioner) is not a purchaser in good faith. It found that there were circumstances
known to MODINA which rendered their transaction fraudulent under the attendant
circumstances.

As a general rule, in a sale under the Torrens system, a void title cannot give rise to a valid
title. The exception is when the sale of a person with a void title is to a third person who
purchased it for value and in good faith.

A purchaser in good faith is one who buys the property of another without notice that
some other person has a right to or interest in such property and pays a full and fair price
at the time of the purchase or before he has notice of the claim or interest of some other
person in the property.

In the case under scrutiny, petitioner cannot claim that he was a purchaser in good faith.
There are circumstances which are indicia of bad faith on his part, to wit: (1) He asked his
nephew, Placido Matta, to investigate the origin of the property and the latter learned that
the same formed part of the properties of MERLINDA's first husband; (2) that the said sale
was between the spouses; (3) that when the property was inspected, MODINA met all the
lessees who informed that subject lands belong to MERLINDA and they had no knowledge
that the same lots were sold to the husband.

It is a well-settled rule that a purchaser cannot close his eyes to facts which would put a
reasonable man upon his guard to make the necessary inquiries, and then claim that he
acted in good faith. His mere refusal to believe that such defect exists, or his wilful closing
of his eyes to the possibility of the existence of a defect in his vendor's title, will not make
him an innocent purchaser for value, if it afterwards develops that the title was in fact
defective, and it appears that he had such notice of the defect as would have led to its
discovery had he acted with that measure of precaution which may reasonably be required
of a prudent man in a like situation. 15

Thus, petitioner cannot claim that the sale between him and MODINA falls under the
exception provided for by law.

With regard to the third issue posed by petitioner whether the Trial Court's decision
allowing recovery on the part of Merlinda Chiang of subject properties was void
petitioner's contention is untennable. It is theorized that as the sale by MERLINDA was by
virtue of an Order to Sell issued in the Intestate Estate Proceedings of her late husband,
Nelson Plana to allow recovery will defeat the said order of the Probate Court. Petitioner
equated the aforesaid Order to Sell as a judgment, which another court in a regular
proceeding has no jurisdiction to reverse.

Petitioner is under the mistaken impression that as the Order to Sell had become a
judgment in itself as to the validity of the sale of the properties involved, any question as
to its nullity should have been brought before the Court of Appeals on appeal when the
said Order was issued.

It is a well-settled rule that a Court of First Instance (now Regional Trial Court) has
jurisdiction over a case brought to rescind a sale made upon prior authority of a Probate
Court. This does not constitute an interference or review of the order of a co-equal Court
since the Probate Court has no jurisdiction over the question of title to subject properties.
Consequently, a separate action may be brought to determine the question of ownership. 16

Lastly, on the issue of whether only three-fourths of the property in question should have
been returned to MERLINDA, petitioner's stance is equally unsustainable. It is a settled
doctrine that an issue which was neither averred in the Complaint nor raised during the
trial before the lower court cannot be raised for the first time on appeal, as such a
recourse would be offensive to the basic rules of fair play, justice, and due process. 17

The issue of whether only three-fourths of subject property will be returned was never an
issue before the lower court and therefore, the petitioner cannot do it now. A final word. In
a Petition for Review, only questions of law may be raised. It is perceived by the Court that
what petitioner is trying to, albeit subtly, is for the Court to examine the probative value or
evidentiary weight of the evidence presented below 18. The Court cannot do that unless the
appreciation of the pieces of evidence on hand is glaringly erroneous. But this is where
petitioner utterly failed.1wphi1.nt

WHEREFORE, the Petition is DENIED and the decision of the Court of Appeals, dated
September 30, 1992, in CA-G.R. CV No. 26051 AFFIRMED. No pronouncement as to costs.

SO ORDERED.

RAS VS RASUL

TEEHANKEE, J.:

This is a petition brought by the petitioner to review and set aside the order of respondent
Judge dated December 12, 1978 in Criminal Case No. 240 of the Court of First Instance of
Basilan denying petitioner's motion as accused therein to suspend proceedings due to the
existence of a prejudicial question in Civil Case No. 73 of the same court. Finding the
petition and the Solicitor General's concurrence therewith to be meritorious, this Court
hereby grants the petition and accordingly sets aside the questioned order and hereby
enjoins the respondent Judge from further proceeding with Criminal Case No. 73 until
Civil Case No. 240 is finally decided and terminated.

A chronological statement of the antecedent facts follows:

On or about April 27, 1978, Luis Pichel filed a complaint against petitioner Alejandro Ras
and a certain Bienvenido Martin before the Court of First Instance of Basilan, docketed
therein as Civil Case No. 73 praying for the nullification of the deed of sale executed by
Alejandro Ras in favor of his codefendant Bienvenido Martin and for the declaration of the
prior deed of sale allegedly executed in his favor by the defendant Alejandro Ras as valid.
In their answer, the defendants (the Ras spouses) alleged that they never sold the property
to Pichel and that the signatures appearing in the deed of sale in favor of plaintiff Pichel (in
Civil Case No. 73) were forgeries and that therefore the alleged deed of sale in Pichel's favor
sought to be declared valid was fictitious and inexistent.

While Civil Case No. 73 was being tried before the Court of First Instance of Basilan, the
Provincial Fiscal of Basilan filed on or about September 5, 1978 an Information for Estafa
in the same court against Alejandro Ras arising from the same alleged double sale subject
matter of the civil complaint filed by Luis Pichel. The case was docketed as Criminal Case
No. 240 of the Court of First Instance of Basilan.

On November 6, 1978, petitioner, through counsel, filed a "Motion for Suspension of

Action" in said Criminal Case No. 240 claiming that the same facts and issues were
involved in both the civil and criminal case and that the resolution of the issues in the civil
case would necessarily be determinative of the guilt or innocence of the accused.

The Provincial Fiscal of Basilan filed his opposition on December 4, 1978.

In his Order of December 12, 1978, the respondent judge saw no prejudicial question and
accordingly denied the motion. Hence, the present petition.

A prejudicial question is defined as that which arises in a case the resolution of which is a
logical antecedent of the issue involved therein, and the cognizance of which pertains to
another tribunal. The prejudicial question must be determinative of the case before the
court but the jurisdiction to try and resolve the question must be lodged in another court
or tribunal 1 It is a question based on a fact distinct and separate from the crime but so
intimately connected with it that it determines the guilt or innocence of the accused. 2

For a civil case to be considered prejudicial to a criminal action as to cause the suspension
of the criminal action pending the determination of the civil, it must appear not only that
the civil case involves the same facts upon which the criminal pro. prosecution is based,
but also that the resolution of the issues raised in said civil action would be necessary
determinative of the guilt or innocence of the accused. 3

On the basis of the issues raised in both the criminal and civil cases against petitioner and
in the light of the foregoing concepts of a prejudicial question, there indeed appears to be a
prejudicial question in the case at bar, considering that petitioner Alejandro Ras' defense
(as defendant) in Civil Case No. 73 of the nullity and forgery of the alleged prior deed of
sale in favor of Luis Pichel (plaintiff in the civil case and complaining witness in the
criminal case) is based on the very same facts which would be necessarily determinative of
petitioner Ras' guilt or innocence as accused in the criminal case. If the first alleged sale in
favor of Pichel is void or fictitious, then there would be no double sale and petitioner would
be innocent of the offense charged. A conviction in the criminal case (if it were allowed to
proceed ahead) would be a gross injustice and would have to be set aside if it were finally
decided in the civil action that indeed the alleged prior deed of sale was a forgery and
spurious.

The Solicitor General in his comment expressed his concurrence with the petition thus:
"The petitioner Alejandro Ras claims in his answer to the complaint in Civil Case No. 73
that he had never sold the property in litigation to the plaintiff (Luis Pichel) and that his
signatures in the alleged deed of and that of his wife were forged by the plaintiff. It is,
therefore, necessary that the truth or falsity of such claim be first determined because if
his claim is true, then he did not sell his property twice and no estafa was committed. The
question of nullity of the sale is distinct and from the crime of estafa (alleged double sale)
but so intimately connected with it that it determines the guilt or innocence of herein
petitioner in the c action."

Wherefore, the Order of respondent judge in Criminal Case No. 240 dated December 12,
1978 is hereby set aside. The temporary restraining order issued by this Court on May 16,
1979 is hereby made permanent and respondent judge is enjoined from proceeding with
the arraignment and trial of Criminal Case No. 240 until and unless Civil Case No. 73
shall have been finally decided and terminated adversely against petitioner. No costs.

YAP vs PARAS

CRUZ, J.:

This is still another dispute between brother and sister over a piece of property they
inherited from their parents. The case is complicated by the circumstance that the private
respondent's counsel in this petition is the son of the judge, the other respondent, whose
action is being questioned.

Petitioner Juliana P. Yap was the sister of private respondent Martin Paras.*

On October 31, 1971, according to Yap, Paras sold to her his share in the intestate estate
for P300.00. The sale was evidenced by a private document. Nineteen years later, on May
2, 1990, Paras sold the same property to Santiago Saya-ang for P5,000.00. This was
evidenced by a notarized Deed of Absolute Sale.

When Yap learned of the second sale, she filed a complaint for estafa against Paras and
Saya-ang with the Office of the Provincial Prosecutor of General Santos City. 1 On the same
date, she filed a complaint for the nullification of the said sale with the Regional Trial
Court of General Santos City. 2

After investigation, the Provincial Prosecutor instituted a criminal complaint for estafa
against Paras with the Municipal Circuit Trial Court of Glan-Malapatan, South Cotabato,
presided by Judge Alfredo D. Barcelona, Sr.

On April 17, 1991, before arraignment of the accused, the trial judge motu proprio issued
an order dismissing the criminal case on the ground that:

. . . after a careful scrutiny of the statements of complainant, Juliana P. Yap and of the
respondent Martin Paras and his witnesses, the Court holds and maintained (sic)
that there is a prejudicial question to a civil action, which must be ventilated in the proper
civil court. In the case of Ras vs.Rasul, 100 SCRA 125, the Supreme Court had already
made a pronouncement that "a criminal action for Estafa for alleged double sale of
property is a prejudicial question to a civil action for nullity of the alleged Deed of Sale and
defense of the alleged vendors of forgeries of their signatures to the Deed." 3

The Petitioner moved for reconsideration, which was denied on April 30, 1990. She then
came to this Court for relief in this special civil action for certiorari.

The Court could have referred this petition to the Court of Appeals, which has concurrent
jurisdiction under BP 129, but decided to resolve the case directly in view of the peculiar
circumstances involved.

The petitioner's contention is that where there is a prejudicial question in a civil case, the
criminal action may not be dismissed but only suspended. Moreover, this suspension may
not be done motu proprio by the judge trying the criminal case but only upon petition of
the defendant in accordance with the Rules of Court. It is also stressed that a reversal of
the order of dismissal would not bar the prosecution of the accused under the double
jeopardy rule because he has not yet been arraigned.

The Court notes that the counsel for private respondent Paras who filed the comment in
his behalf is the son and namesake of Judge Barcelona. Atty. Alfredo L. Barcelona, Jr. is
employed in the Public Attorney's Office. He has made it of record that he was not the
counsel of Paras at the time the questioned order of dismissal was issued by his father. He
thus impliedly rejects the charge of bias against his father.

Perhaps out of filial loyalty, Atty. Barcelona suggests there may have been a basis for the
order in view of the alleged double sale of the property which was being litigated in the
regional trial court. He concedes, however, that the order may have been premature and
that it could not have been issued motu proprio. Agreeing that double jeopardy would not
attach because of the lack of arraignment, he asks that his Comment be considered a
motion for the suspension of the criminal action on the ground of prejudicial question.

The Court has deliberated on the issues and finds that the respondent judge did indeed
commit grave abuse of discretion in motu proprio issuing the order of dismissal.

Section 6, Rule 111 of the 1985 Rules on Criminal Procedure as amended by this Court on
July 7, 1988, provides as follows:

Sec. 6. Suspension by reason of prejudicial question. A petition for suspension of the

criminal action based upon the pendency of a prejudicial question in a civil action may be
filed in the office of the fiscal or the court conducting the preliminary investigation. When
the criminal action has been filed in court for trial, the petition to suspend shall be filed in
the same criminal action at any time before the prosecution rests.

Judge Barcelona's precipitate action is intriguing, to say the least, in light of the clear
provision of the above-quoted rule. The rule is not even new, being only a rewording of the
original provision in the Rules of Court before they were amended. It plainly says that the
suspension may be made only upon petition and not at the instance of the judge alone,
and it also says suspension, and not dismissal. One also wonders if the person who
notarized the disputed second sale, Notary Public Alexander C. Barcelona, might be
related to the respondent judge.

But more important than the preceding considerations is the trial judge's misapprehension
of the concept of a prejudicial question.

Section 5, Rule 111 of the 1985 Rules on Criminal Procedure as amended provides:

Sec. 5. Elements of prejudicial question. The two (2) essential elements of a prejudicial
question are: (a) the civil action involves an issue similar or intimately related to the issue
raised in the criminal action; and (b) the resolution of such issue determines whether or
not the criminal action may proceed.

A prejudicial question is defined as that which arises in a case the resolution of which is a
logical antecedent of the issue involved therein, and the congnizance of which pertains to
another tribunal. The prejudicial question must be determinative of the case before the
court but the jurisdiction to try and resolve the question must be lodged in another court
or tribunal. 4 It is a question based on a fact distinct and separate from the crime but so
intimately connected with it that it determines the guilt or innocence of the accused. 5

We have held that "for a civil case to be considered prejudicial to a criminal action as to
cause the suspension of the criminal action pending the determination of the civil action,
it must appear not only that the civil case involves the same facts upon which the criminal
prosecution is based, but also that the resolution of the issues raised in said civil action
would be necessarily determinative of the guilt or innocence of the accused". 6

It is the issue in the civil action that is prejudicial to the continuation of the criminal
action, not the criminal action that is prejudicial to the civil action.

The excerpt quoted by the respondent judge in his Order does not appear anywhere in the
decision of Ras v.Rasul. 7 Worse, he has not only misquoted the decision but also wrongly
applied it. The facts of that case are not analogous to those in the case at bar.

In that case, Ras allegedly sold to Pichel a parcel of land which he later also sold to Martin.
Pichel brought a civil action for nullification of the second sale and asked that the sale
made by Ras in his favor be declared valid. Ras's defense was that he never sold the
property to Pichel and his purported signatures appearing in the first deed of sale were
forgeries. Later, an information for estafa was filed against Ras based on the same double
sale that was the subject of the civil action. Ras filed a "Motion for Suspension of Action"
(that is, the criminal case), claiming that the resolution of the issues in the civil case
would necessarily be determinative of his guilt or innocence.

Through then Associate Justice Claudio Teehankee, this Court ruled that a suspension of
the criminal action was in order because:

On the basis of the issues raised in both the criminal and civil cases against petitioner and
in the light of the foregoing concepts of a prejudicial question, there indeed appears to be a
prejudicial question in the case at bar, considering that petitioner Alejandro Ras' defense
(as defendant) in Civil Case No. 73 of the nullity and forgery of the alleged prior deed of
sale in favor of Luis Pichel (plaintiff in the civil case and complaining witnesses in the
criminal case) is based on the very same facts which would be necessarily determinative of
petitioner Ras' guilt or innocence as accused in the criminal case. If the first alleged sale in
favor of Pichel is void or fictitious, then there would be no double sale and petitioner would
be innocent of the offense charged. A conviction in the criminal case (if it were allowed to
proceed ahead) would be a gross injustice and would have to be set aside if it were finally
decided in the civil action that indeed the alleged prior deed of sale was a forgery and
spurious.

xxx xxx xxx

The petitioner Alejandro Ras claims in his answer to the complaint in Civil Case No. 73
that he had never sold the property in litigation to the plaintiff (Luis Pichel) and that his
signatures in the alleged deed of sale and that of his wife were forged by the plaintiff. It is,
therefore, necessary that the truth or falsity of such claim be first determined because if
his claim is true, then he did not sell his property twice and no estafa was committed. The
question of nullity of the sale is distinct and separate from the crime of estafa (alleged
double sale) but so intimately connected with it that it determines the guilt or innocence of
herein petitioner in the criminal action.
In the Ras case, there was a motion to suspend the criminal action on the ground that the
defense in the civil case forgery of his signature in the first deed of sale had to be
threshed out first. Resolution of that question would necessarily resolve the guilt or
innocence of the accused in the criminal case. By contrast, there was no motion for
suspension in the case at bar; and no less importantly, the respondent judge had not been
informed of the defense Paras was raising in the civil action. Judge Barcelona could not
have ascertained then if the issue raised in the civil action would determine the guilt or
innocence of the accused in the criminal case.

It is worth remarking that not every defense raised in the civil action will raise a
prejudicial question to justify suspension of the criminal action. The defense must involve
an issue similar or intimately related to the same issue raised in the criminal action and
its resolution should determine whether or not the latter action may proceed.

The order dismissing the criminal action without a motion for suspension in accordance
with Rule 111, Section 6, of the 1985 Rules on Criminal Procedure as amended, and even
without the accused indicating his defense in the civil case for the annulment of the
second sale, suggests not only ignorance of the law but also bias on the part of the
respondent judge.

Judge Alfredo D. Barcelona, Sr. is sternly reminded that under the Code of Judicial
Conduct, "a judge shall be faithful to the law and maintain professional competence" and
"should administer justice impartially." He is hereby reprimanded for his questionable
conduct in the case at bar, with the warning that commission of similar acts in the future
will be dealt with more severely.

WHEREFORE, the petition is GRANTED. The Order issued by Judge Alfredo D. Barcelona,
Sr. dated April 17, 1991, dismissing Criminal Case No. 1902-G, and the Order dated April
30, 1991, denying the motion for reconsideration, are REVERSED and SET ASIDE.
Criminal Case No. 1902-G is ordered REINSTATED for further proceedings, but to be
assigned to a different judge.

SO ORDERED.

Balgos, Jr. vs Sandiganbayan

GANCAYCO, J.:

Does the denial by the Sandiganbayan of the motion to withdraw the information and of
another motion to suspend proceedings on the ground of a prejudicial question in a
pending civil action constitute a grave abuse of discretion correctible by the writs
of certiorari and prohibition?

The facts are undisputed. Petitioners were charged with violation of Section 3(c) of
Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practice Act, as
amended, in an information that was filed with the Sandiganbayan on April 18, 1986 by
the Special Prosecutor which was approved by the Deputy Tanodbayan, after a preliminary
investigation. The information reads as follows:

That on December 27, 1984, in Bagabag, Nueva Vizcaya and within the jurisdiction of this
Honorable Court, the accused Flaviano D. Balgos, Jr., a public officer, being the acting
Clerk of Court of the Regional Trial Court in Bayombong, Nueva Vizcaya and also the Ex-
Officio provincial sheriff of the said province; and the other accused Virgilio F. Dacayo,
Jesus C. Sison and Leon C. Cuaresma, all public officers, being Deputy Provincial Sheriffs
of said province, acting with evident bad faith and manifest partiality, did then and there,
wilfully and unlawfully enforce a Writ of Execution against a Mustang car registered in the
name of Leticia Acosta-Ang, despite their knowledge that the registered owner is not the
judgment debtor in Civil Case No. 4047 of the Regional Trial Court of Nueva Vizcaya which
is the subject of the said writ of execution, thereby causing undue injury to the said
Leticia Acosta-Ang (complainant) and giving unwarranted benefits to the judgment creditor
in said civil case. 1

On March 18,1987, Antonio Uy Lim, the plaintiff and prevailing party in Civil Case No.
4047 filed a complaint for rescission of the sale of the car by Juanito Ang to private
respondent Leticia Acosta-Ang for being allegedly in fraud of creditors. The said complaint
was filed with the Regional Trial Court of Nueva Vizcaya and was docketed as Civil Case
No. 5307. On the same day, petitioners filed a motion for reinvestigation in the
Tanodbayan. The same was granted on May 18,1987.

After conducting the reinvestigation, the Tanodbayan issued an order resolving to:

(a) set aside and render without force and effect its Resolution in this case dated March
25,1986;

(b) to dismiss the case for lack of merit.

(c) to withdraw the Information filed in Criminal Case No. 11414 as soon as possible in the
interest of justice. 2

On April 22, 1988 the Tanodbayan filed with the Sandiganbayan a motion to withdraw the
information against petitioners. This was denied on June 29, 1988. On September 1,
1988, petitioners filed a motion to suspend proceedings in the criminal case against them
on the ground of the existence of a prejudicial question in Civil Case No. 5307. This was
likewise denied by the Sandiganbayan on October 24,1988.

Hence, the instant petition where it is alleged that the Sandiganbayan committed a grave
abuse of discretion amounting to lack or excess of jurisdiction in denying the aforestated
motions.

On June 6, 1989, the Court, acting on the ex-parte urgent motion of petitioners for the
issuance of a temporary restraining order enjoining the Sandiganbayan from setting the
arraignment of petitioners, and after requiring the Solicitor General to comment thereon,
granted the motion. Thereafter, the Solicitor General filed a Manifestation in support of the
stand taken by the petitioners.

The petition is devoid of merit.

In the case of Crespo vs. Mogul, 3 this Court laid down the ground rules and the
parameters pertaining to the direction and control of the prosecution of a criminal action
by the fiscal or government prosecutor as provided for in the rules 4 in relation to the
jurisdiction of the competent courts over such cases. We ruled that while the public
prosecutor has the sole direction and control in the prosecution of offenses, once the
complaint or information is filed in court, the court thereby acquires jurisdiction over the
case and all subsequent actions that may be taken by the public prosecutor in relation to
the disposition of the case must be subject to the approval of the said court. 5

In such an instance, before a re-investigation of the case may be conducted by the public
prosecutor, the permission or consent of the court must be secured. And if after such
reinvestigation the prosecution finds a cogent basis to withdraw the information or
otherwise cause the dismissal of the case, such proposed course of action must be
addressed to the sound discretion of the court.

In the past, a government prosecutor could practically impose his judgment or opinion on
the court as it was recognized that the prosecution of offenses is his exclusive domain
which resulted then and again in a clash or conflict of opinion between the prosecutors
and the courts to the detriment of the administration of justice. Such a situation may no
longer be possible since Crespo. It is the court that has now the final say on any
subsequent disposition or action once the case is brought before it.

The only instance when the appellate court should stay the hand of the trial court in such
cases is when it is shown that the trial court acted without jurisdiction or in excess of its
jurisdiction or otherwise committed a grave abuse of discretion amounting to such lack or
excess of jurisdiction.

In this case, the petitioners are public officers charged with having violated Section 3(c) of
Republic Act No. 3019, as amended, for evident bad faith and manifest partiality in
enforcing the writ of execution in Civil Case No. 4047 against a Mustang car registered in
the name of Leticia Acosta-Ang (complainant) who is not the judgment debtor thereby
causing undue injury to said complainant and giving unwarranted benefits to the
judgment creditor in said case.

Upon reinvestigation of the criminal case by the Tanodbayan, he found evidence tending to
show that the sale of said car to the complainant by Juanita Ang, the judgment debtor,
was a sham intended to defraud his creditors; that the deed of absolute sale which
ostensibly was executed before a notary public on June 18, 1983 appeared to be fictitious
inasmuch as the entry of the document in the notarial register of said notary public on
said date referred to a catering contract of other parties; that the certificate of registration
of the car was issued to complainant only on June 13, 1984 which showed that the
document of sale was actually executes only on or about the same date, that is, seven (7)
days after Juanita Ang received copy of the adverse decision in Civil Case No. 4047 on
June 8, 1984; and that upon the execution of the judgment, the car was found in the
possession of Alvin, the son of Juanita Ang, who admitted that the car belonged to his
father by showing the receipt of its repair in the name of Juanita Ang. This is the basis of
the motion for withdrawal of the information of the Tanodbayan.

In denying said motion the public respondent Sandiganbayan stated in its resolution
dated June 29, 1988 that the issue in the criminal case was not so much whether the car
was owned by Juanita Ang or Leticia Ang but whether it was rightly seized, that is,
whether or not it was attended with partiality as to extend unwarranted benefits to the
judgment creditor, quoting the resolution of the Tanodbayan after a preliminary
investigation for the filing of the information:

In the implementation of the writ of execution it is the bounden duty of the sheriffs to
ascertain the true owner of the property sought to be levied. Assuming that they have not
seen the Certificate of Registration showing that the real owner is Leticia Acosta-Ang, they
could have easily verified the same at the Land Transportation Commission. Their
contention that they were informed by Alvin Ang and the neighbors of Juanita Ang (the
judgment debtor) that the latter is the owner of the car is clearly hearsay evidence. The
best evidence is the document itself the Certificate of Registration shown to the
respondents. Their conclusion that the transfer of ownership to Leticia Ang, even if true,
may be simulated to defraud the judgment creditor is plainly untenable, for the same
should be addressed to the sound discretion of a competent court in an action for
annulment of the Deed of Sale.

The respondents are aware that the complainant is not a party to the civil case filed by the
creditor against spouses Juanita and Lydia Ang and that a writ of execution cannot be
implemented validly against one who is not a party to the action. All these, coupled with
the undue haste in which the levy on the Mustang car was made without first ascertaining
the true owner thereof demonstrate quite convincingly the evident bad faith and manifest
partiality of the respondents, thereby giving unwarranted benefits to the judgment creditor
to the damage and prejudice of the complainant. ... 6

We agree. Although at the reinvestigation, the Tanodbayan was persuaded that in fact the
sale of the car to Leticia Ang was fraudulent, this did not necessarily clear petitioners of
the aforesaid Anti-Graft charge against them. Still the burden is on the petitioners to
establish that they acted in good faith in proceeding with the execution on the car even
they were presented evidence tending to show it did not belong to Juanito Ang anymore.

In its resolution dated August 11, 1988 denying the motion for reconsideration filed by
petitioner, the Sandiganbayan held that the arguments adduced relate to matters of
defense. The Court finds that the public respondent did not err in denying the motion for
withdrawal of the information.

By the same token, the denial of the motion to suspend the criminal proceedings on the
ground of the pendency of a prejudicial question in Civil Case No. 5307 is wen taken. The
doctrine of prejudicial question comes into play usually in a situation where a civil action
and a criminal action are both pending and there exists in the former an issue which must
be pre-emptively resolved before the criminal action may proceed, because whatsoever the
issue raised in the civil action is resolved would be determinative juris et jure of the guilt or
innocence of the accused in the criminal case. 7

In this case, as correctly held by public respondent, the pending civil case for the
annulment of the sale of the car to Leticia Ang (Civil Case No. 5307) is not determinative of
the guilt or innocence of the petitioners for the acts allegedly committed by them in seizing
the car. Even if in the civil action it is ultimately resolved that the sale was null and void,
it does not necessarily follow that the seizure of the car was rightfully undertaken. The car
was registered in the name of Leticia Ang six (6) months before the seizure. Until the
nullity of the sale is declared by the courts, the same is presumptively valid. Thus,
petitioners must demonstrate that the seizure was not attended by manifest bad faith in
order to clear themselves of the charge in the criminal action.

WHEREFORE, the petition is DENIED for lack of merit and the restraining order dated
June 6, 1989 is hereby lifted. No costs.

SO ORDERED
 Beltran vs. People

BUENA, J.:

This petition for review, filed under Rule 45 of the 1997 Rules of Civil Procedure, seeks to
review and set aside the Order dated January 28, 1999 issued by Judge Florentino A.
Tuazon, Jr. of the Regional Trial Court of Makati City, Branch 139 in Special Civil Case
No. 98-3056, entitled "Meynardo Beltran vs. People of the Philippines and Hon. Judge
Alden Cervantes of the Metropolitan Trial Court of Makati city, Branch 61." The said Order
denied petitioners prayer for the issuance of a writ of preliminary injunction to enjoin
Judge Cervantes from proceeding with the trial of Criminal Case No. 236176, a
concubinage case against petitioner on the ground that the pending petition for
declaration of nullity of marriage filed by petitioner against his wife constitutes a
prejudicial question.

The antecedent facts of the case are undisputed:

Petitioner Meynardo Beltran and wife Charmaine E. Felix were married on June 16, 1973
at the Immaculate Concepcion Parish Church in Cubao, Quezon City. [1]

On February 7, 1997, after twenty-four years of marriage and four children, [2] petitioner
filed a petition for nullity of marriage on the ground of psychological incapacity under
Article 36 of the Family Code before Branch 87 of the Regional Trial Court of Quezon City.
The case was docketed as Civil Case No. Q-97-30192. [3]

In her Answer to the said petition, petitioner's wife Charmaine Felix alleged that it was
petitioner who abandoned the conjugal home and lived with a certain woman named
Milagros Salting.[4] Charmaine subsequently filed a criminal complaint for
[5]
concubinage under Article 334 of the Revised Penal Code against petitioner and his
paramour before the City Prosecutor's Office of Makati who, in a Resolution dated
September 16, 1997, found probable cause and ordered the filing of an
Information[6] against them. The case, docketed as Criminal Case No. 236176, was filed
before the Metropolitan Trial Court of Makati City, Branch 61.

On March 20, 1998, petitioner, in order to forestall the issuance of a warrant for his
arrest, filed a Motion to Defer Proceedings Including the Issuance of the Warrant of Arrest
in the criminal case. Petitioner argued that the pendency of the civil case for declaration of
nullity of his marriage posed a prejudicial question to the determination of the criminal
case. Judge Alden Vasquez Cervantes denied the foregoing motion in the Order [7] dated
August 31, 1998. Petitioner's motion for reconsideration of the said Order of denial was
likewise denied in an Order dated December 9, 1998.

In view of the denial of his motion to defer the proceedings in the concubinage case,
petitioner went to the Regional Trial Court of Makati City, Branch 139 on certiorari,
questioning the Orders dated August 31, 1998 and December 9, 1998 issued by Judge
Cervantes and praying for the issuance of a writ of preliminary injunction. [8] In an
Order[9] dated January 28, 1999, the Regional Trial Court of Makati denied the petition
for certiorari. Said Court subsequently issued another Order [10] dated February 23, 1999,
denying his motion for reconsideration of the dismissal of his petition.

Undaunted, petitioner filed the instant petition for review.

Petitioner contends that the pendency of the petition for declaration of nullity of his
marriage based on psychological incapacity under Article 36 of the Family Code is a
prejudicial question that should merit the suspension of the criminal case for concubinage
filed against him by his wife.

Petitioner also contends that there is a possibility that two conflicting decisions might
result from the civil case for annulment of marriage and the criminal case for concubinage.
In the civil case, the trial court might declare the marriage as valid by dismissing
petitioner's complaint but in the criminal case, the trial court might acquit petitioner
because the evidence shows that his marriage is void on ground of psychological
incapacity. Petitioner submits that the possible conflict of the courts' ruling regarding
petitioner's marriage can be avoided, if the criminal case will be suspended, until the court
rules on the validity of marriage; that if petitioner's marriage is declared void by reason of
psychological incapacity then by reason of the arguments submitted in the subject
petition, his marriage has never existed; and that, accordingly, petitioner could not be
convicted in the criminal case because he was never before a married man.

Petitioner's contentions are untenable.

The rationale behind the principle of prejudicial question is to avoid two conflicting
decisions. It has two essential elements: (a) the civil action involves an issue similar or
intimately related to the issue raised in the criminal action; and (b) the resolution of such
issue determines whether or not the criminal action may proceed. [11]

The pendency of the case for declaration of nullity of petitioner's marriage is not a
prejudicial question to the concubinage case. For a civil case to be considered prejudicial
to a criminal action as to cause the suspension of the latter pending the final
determination of the civil case, it must appear not only that the said civil case involves the
same facts upon which the criminal prosecution would be based, but also that in the
resolution of the issue or issues raised in the aforesaid civil action, the guilt or innocence
of the accused would necessarily be determined.

Article 40 of the Family Code provides:

"The absolute nullity of a previous marriage may be invoked for purposes of remarriage on
the basis solely of a final judgment declaring such previous marriage void."

In Domingo vs. Court of Appeals,[12] this Court ruled that the import of said provision is
that for purposes of remarriage, the only legally acceptable basis for declaring a previous
marriage an absolute nullity is a final judgment declaring such previous marriage void,
whereas, for purposes of other than remarriage, other evidence is acceptable. The
pertinent portions of said Decision read:

"xxx Undoubtedly, one can conceive of other instances where a party might well invoke the
absolute nullity of a previous marriage for purposes other than remarriage, such as in
case of an action for liquidation, partition, distribution and separation of property between
the erstwhile spouses, as well as an action for the custody and support of their common
children and the delivery of the latters' presumptive legitimes. In such cases, evidence
needs must be adduced, testimonial or documentary, to prove the existence of grounds
rendering such a previous marriage an absolute nullity. These needs not be limited solely
to an earlier final judgment of a court declaring such previous marriage void."

So that in a case for concubinage, the accused, like the herein petitioner need not present
a final judgment declaring his marriage void for he can adduce evidence in the criminal
case of the nullity of his marriage other than proof of a final judgment declaring his
marriage void.

With regard to petitioner's argument that he could be acquitted of the charge of

concubinage should his marriage be declared null and void, suffice it to state that even a
subsequent pronouncement that his marriage is void from the beginning is not a defense.

Analogous to this case is that of Landicho vs. Reloval[13] cited in Donato vs.
Luna[14] where this Court held that:

"xxx Assuming that the first marriage was null and void on the ground alleged by
petitioner, that fact would not be material to the outcome of the criminal case. Parties to
the marriage should not be permitted to judge for themselves its nullity, for the same must
be submitted to the judgment of the competent courts and only when the nullity of the
marriage is so declared can it be held as void, and so long as there is no such declaration
the presumption is that the marriage exists. Therefore, he who contracts a second
marriage before the judicial declaration of nullity of the first marriage assumes the risk of
being prosecuted for bigamy."

Thus, in the case at bar it must also be held that parties to the marriage should not be
permitted to judge for themselves its nullity, for the same must be submitted to judgment
of the competent courts and only when the nullity of the marriage is so declared can it be
held as void, and so long as there is no such declaration the presumption is that the
marriage exists for all intents and purposes. Therefore, he who cohabits with a woman not
his wife before the judicial declaration of nullity of the marriage assumes the risk of being
prosecuted for concubinage. The lower court therefore, has not erred in affirming the
Orders of the judge of the Metropolitan Trial Court ruling that pendency of a civil action for
nullity of marriage does not pose a prejudicial question in a criminal case for concubinage.

WHEREFORE, for lack of merit, the instant petition is DISMISSED.

SO ORDERED.